Changing leaders?

Hello, it's Friday the 27th of February. I thought we'd take a moment to reflect on the last fortnight or so in markets. It's been actually a fairly sort of quiet period in terms of news flow, at least on the surface. I mean, there's been, as always, lots going on behind the scenes. But generally speaking, in terms of market news and market moves, it's actually been a fairly quiet period. That's despite the fact, of course, we've had the Supreme Court ruling on tariffs we've had and an armada heading towards Iran. So there's lots going on but at the same time markets have generally sort of taken this in their stride. Let me give you some context for that. We're in the last trading day of February now of course and markets have done generally pretty well. The UK is up around about 6% in sterling terms over the course of Feb. Europe's up about 4% in sterling terms. Japan up a very impressive 10% month-to-date so far. The laggard in all of this is the US which looks at the moment likely to end up the month in negative territory, currently down about 50 basis points in dollar terms. It's up a little bit in sterling in terms, we've had a bit of sterling weakness over the course of the month, but certainly not a particularly strong period for the US when other markets, these markets we've talked about in various videos as being sort of less loved and undervalued for several years, these market have actually done pretty well. So as much as there's been perhaps less of this chaotic news over the course of the month, it still seems whether it be for valuation reasons or purely sort of sentiment reasons, the US is just sort of sitting in the shadow of other major markets over the course of February and indeed year-to-date.

There are a couple of interesting news stories over the last few days that are worth reflecting on. The first one, of course, you'll have heard plenty about it already, the Nvidia results in the middle of the week. They're a pretty, you know, stonking set of results, really, revenue is up about 73% this time compared to this time last year. So by no means a weak set of results but evidently behind lofty expectations. The stock was off around about 5% yesterday, so talk about having a lot of good news already in the price. And perhaps also, it dovetails into this broader growing caution when it comes to artificial intelligence related stocks and software and all the other bits and pieces that you have probably read about elsewhere. It's I think a change of tone overall to you know remaining optimism in terms of the technology, but perhaps a cautious optimism rather than the sort of rapacious excitement that we saw over the last couple of years. It's by no means a disaster. I think the Magnificent 7 is off around about 7% from its highs in October last year. So you know, put that in context of how well it's done over the past few years, it's hardly a particularly poor period of performance overall. But nevertheless, it just reflects, I think, a slight changing of tone and towards a healthy perspective really that's not just universally positive. Another bit of news you may not have seen referring to Magnificent 7, putting it in context of the UK stock market, which has done very well over the last couple of years. The UK, since the start of 2025 is up over 30% in sterling terms. The Magnificent 7 are up a mere 10% over that same time period to this week. And if you think I'm cheating because I'm doing it in sterling terms, sterling has been pretty strong over that period, but even in dollar terms, the Magnificent 7 is up only about 20%. So in its own local currency, it's done well, clearly 20% is a decent return over that time period, but it's not as good in local currency terms or indeed sterling terms as the UK market's done over the same period and quite substantially behind as well.

Finally, we should really reflect on the Greens' historic by-election win overnight. It's their first by-election win and indeed their first seat in the North of England. Evidently it will put further pressure on the Prime Minister who's already, I think it's fair to say, embattled. Bookies, I think have him as unlikely to still be in the role by the end of the year now, which would make it the seventh Prime Minister if he's replaced, the seventh prime minister in the UK in the space of a decade, which is a pretty high turnover for any sort of position but certainly for the Prime Ministership of the UK. It does have potential ramifications in terms of politics, but oddly enough, it hasn't really been noticed in markets. The UK stock market actually opened up slightly today. It's certainly taking it in its stride. The gilt yields have drifted down a little bit overnight, so hardly demonstrating any sort of panic or even concern. Currency markets is the other place, there's been a slight weakening against the euro of sterling but again nothing really major, so markets are really shrugging this off, treating it as perhaps what by elections often are which is an opportunity for the electorate really to sort of give the government a bit of a surprise, a bit of a bloody nose perhaps, signal discontent whilst not necessarily reflecting substantial changes in terms of general election voting behaviour. Nevertheless polling and all the rest of it doesn't paint a particularly strong picture for the government today and so there'll be plenty of opportunity for more volatility, more concerns to come through as we head through this parliamentary cycle. But as of today, that news in terms of the by-election really sort of being taken in the market stride, which is fairly logical, and again, a pretty rational response to the news flow overnight.

Just a couple of housekeeping points while we're here. We are embarking on our round table events across the country in the next couple of months. So if you are keen to join us, if you're a financial professional and keen to join us, please do let your Liontrust representative know. We look forward to seeing you all over the country.

One final little bit of information, as we go into March, it will herald the third anniversary of the new strategic asset allocations that we introduced. Performance in the process overall, the Liontrust Multi-Asset process, has been pretty good over that period. We've recently recorded a deeper dive video into that, so keep your eyes peeled for that if you're interested and we'll get that over to you soon. That's it from me. Have a great weekend when you get there and we will see you next time.