Despite dramatic headlines, markets resume growth trajectory
Geopolitical trade tensions are happening alongside ongoing physical conflict between nations, while populations are feeling the effects of climate change as natural disasters strike communities unexpectedly and seemingly more often.
The state of the world feels increasingly volatile, uncertain, complex and ambiguous, as every event threatens to upend financial markets and rattle the global economy.
The reality, though, is that financial market movements are painting a more benign story underneath the dramatic headlines, especially when compared against the near-term impact of major historical events.
Today, the S&P 500 is at an all-time high, rallying more than 20 per cent since its drop in April and surpassing its last peak in February.
The continued growth in the market despite global events echoes the age-old phrase 'nothing ever happens', an expression originating from the depths of the online forum 4Chan to describe the lack of significant international developments in modern history. This phrase continues to be a popular meme among young investors today, when analysing the market impact of recent geopolitical tensions.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
A market apathetic to international events
History has shown that shocks from international developments cause knee-jerk reactions in the market, but their effects quickly taper off and markets continue their growth trajectory.
Take, for example, the Covid-19 pandemic in 2020, when countries were locked down and travel was limited for an extended period. Despite that, the S&P 500 fell 5.9 per cent in March 2020 but rebounded 12.1 per cent in three months, reversing its dive and even gaining some ground.
The recent India-Pakistan skirmish is another case in point. Five days after the first conflict, markets recovered with the S&P 500 rising 0.2 per cent and 30 days after, markets rose 5.7 per cent.
The reality is that since World War II, less than 10 per cent of geopolitical shocks have significantly affected markets, with such impact from most global events being very short term.
Factors driving market apathy
Firstly, retail investors piling into stocks are driving markets. In the first half of 2025, they poured a record US$150 billion into US mutual funds and exchange-traded funds (ETFs), while investor holdings of US index futures were near a three-year high.
Retail inflows were the highest in over a decade, indicative of investors' unwavering confidence in the market.
These funds flows reflected investors rebuilding their positions after a reduction in the most extreme tariff risks, and their confidence in the market after adopters and enablers of artificial intelligence indicated a strong outlook in their first-quarter results.
Secondly, globalisation has enabled technology and innovation to travel beyond borders, allowing supply chains to become diversified as countries invest into their capabilities to become self-sufficient.
Countries are no longer isolated in their technological progress. The globally connected innovation ecosystem enables knowledge sharing that accelerates development and fosters competition.
This diffusion of technology has directly impacted global supply chains, making them more diverse, adaptive and resilient, while allowing nations to localise segments of production more readily than in the past.
Countries are increasingly prioritising self-sufficiency in today's multipolar world, especially as more nationalistic tendencies emerge.
These factors effectively cushion today's financial markets and shorten impact from international events. As a result, investors who stayed calm through these developments and continued investing instead of divesting their portfolios benefitted as markets settled down and continued to climb.
What investors can do
Does this mean that investors can fully ignore these events and stick with their investment strategy regardless of what happens? I don't think so.
Instead, investors need to review their portfolios regularly to ensure it fits their financial needs and goals. They need to ensure their portfolios are diversified, and underlying holdings meet quality criteria. While diversification does not ensure profit or protection against loss, there are some strategies that investors can employ to ensure portfolio resilience in volatile times.
Suitable investors may want to consider asset classes that aim to reduce correlations to markets, such as alternative investments in the form of market-neutral funds, multi-strategy hedge funds, relative value arbitrage funds and private equity funds investing in key infrastructure assets.
However, it is also important to be aware that investing in alternative investments is intended for experienced and sophisticated investors who are willing to bear the risks of the investment.
Having different asset types within a portfolio works well as they respond differently to market shocks and developments.
Geographic diversification also makes sense, as emerging markets in Asia and parts of Europe outperform.
Portfolio diversification will also enable investors to weather political leadership changes. Political transitions and changes – especially during elections or regime shifts – can lead to new fiscal and tax policies, as well as shifts in world trade orders and regulations.
Markets often react sharply to these changes even if the impact may be transient. Some shifts may cause more lasting impact to portfolios, so investors will do well to not be overly exposed to any country or region, and expand beyond their bases so as not to double-down on domestic risks.
Prioritising companies with strong balance sheets, consistent earnings and low debt also is a defensive sleeve in investors' portfolios.
Investing in long-term structural themes that endure beyond short-term volatility is also useful as these themes can offer growth even in weak macro environments, and provide returns in the medium term.
Still, many traps remain for investors, and a credible management team can help them identify early winners and navigate the market.
Regularly occurring geopolitical turmoil makes investing feel risky and unstable, but history tells us that the market always recovers and stabilises.
The key for investors is to have a portfolio that will weather uncertain times, and allow them to hold out until the market recovers. That way, they can still rest easy while staying invested the next time everything everywhere occurs all at once.
The writer is the Asia South head of client investment advisory and market executive Singapore, Citi Private Bank
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
an hour ago
- Straits Times
Trump fires US labor official over data and gets earlier than expected chance to reshape Fed
Signage is seen at the United States Department of Labor headquarters in Washington, D.C., U.S., August 29, 2020. REUTERS/Andrew Kelly WASHINGTON/NEW YORK - President Donald Trump on Friday fired a top Labor Department official on the heels of a market-shocking weak scorecard of the U.S. job market, accusing her without evidence of manipulating the figures and adding to already growing concerns about the quality of economic data published by the federal government. In a second surprise economic policy development, the door for Trump to make an imprint on a Federal Reserve with which he clashes almost daily for not lowering interest rates opened much earlier than anticipated when Fed Governor Adriana Kugler unexpectedly announced her resignation on Friday afternoon. The two developments further rattled a stock market already reeling from his latest barrage of tariff announcements and the weak jobs data. The benchmark S&P 500 Index sank 1.6% in its largest daily drop in more than two months. Trump accused Erika McEntarfer, appointed by former President Joe Biden, of faking the jobs numbers. There is no evidence to back Trump's claims of data manipulation by the Bureau of Labor Statistics, the statistical agency that compiles the closely watched employment report as well as consumer and producer price data. A representative for the BLS did not respond to a request for comment. Friday began with BLS reporting the U.S. economy created only 73,000 jobs in July, but more stunning were net downward revisions showing 258,000 fewer jobs had been created in May and June than previously reported. "We need accurate Jobs Numbers. I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified," Trump said in a post on Truth Social. Top stories Swipe. Select. Stay informed. Singapore Opening of Woodlands Health has eased load on KTPH, sets standard for future hospitals: Ong Ye Kung Singapore New vehicular bridge connecting Punggol Central and Seletar Link to open on Aug 3 Singapore New S'pore jobs portal launched for North West District residents looking for work near home Business Property 'decoupling' illegal if done solely to avoid taxes: High Court Singapore HSA investigating teen who was observed to be allegedly vaping in MRT train Asia KTM plans new passenger rail service in Johor Bahru to manage higher footfall expected from RTS Singapore Tengah facility with over 40 animal shelters, businesses hit by ticks Singapore 60 years of building Singapore DATA CONCERNS A Trump administration official who requested anonymity said that while all economic data is noisy, the White House has been dissatisfied with how large the revisions have been in the recent data and issues with lower survey responses. The problem started during COVID and has not been addressed in the years since. "There are these underlying problems that have been festering here for years now that have not been rectified," the person said. "The markets and companies and the government need accurate data, and like, we just weren't getting that," the official said. The BLS has already reduced the sample collection for consumer price data as well as the producer price report, citing resource constraints. The government surveys about 121,000 businesses and government agencies, representing approximately 631,000 individual worksites for the employment report. The response rate has declined from 80.3% in October 2020 to about 67.1% in July, BLS data shows. A Reuters poll last month found 89 of 100 top policy experts had at least some worries about the quality of U.S. economic data, with most also concerned that authorities are not addressing the issue urgently enough. In addition to the concerns over job market data, headcount reductions at BLS have resulted in it scaling back the scope of data collection for the Consumer Price Index, one of the most important gauges of U.S. inflation, watched by investors and policymakers worldwide. Trump's move fed into concerns that politics may influence data collection and publication. "Politicizing economic statistics is a self-defeating act," said Michael Madowitz, principal economist at the Roosevelt Institute's Roosevelt Forward. "Credibility is far easier to lose than rebuild, and the credibility of America's economic data is the foundation on which we've built the strongest economy in the world. Blinding the public about the state of the economy has a long track record, and it never ends well." FED CHANGE SOONER THAN EXPECTED Meanwhile, Kugler's surprise decision to leave the Fed at the end of next week presents Trump an earlier-than-expected opportunity to install a potential successor to Fed Chair Jerome Powell on the central bank's Board of Governors. Trump has threatened to fire Powell repeatedly because the Fed chief has overseen a policymaking body that has not cut interest rates as Trump has demanded. Powell's term expires next May, although he could remain on the Fed board until January 31, 2028, if he chooses. Trump will now get to select a Fed governor to replace Kugler and finish out her term, which expires on January 31, 2026. A governor filling an unexpired term may then be reappointed to a full 14-year term. Some speculation has centered on the idea Trump might pick a potential future chair to fill that slot as a holding place. Leading candidates for the next Fed chair include Trump economic adviser Kevin Hassett, Treasury Secretary Scott Bessent, former Fed Governor Kevin Warsh and Fed Governor Chris Waller, a Trump appointee who this week dissented with the central bank's decision to keep rates on hold, saying he preferred to start lowering them now. Trump, as he was leaving the White House to spend the weekend at his Bedminster, New Jersey, estate, said he was happy to have the open slot to fill. "I would not read any political motivation into what [Kugler is] doing, although the consequence of what she's doing is she's calling Trump's bluff," said Derek Tang, an analyst at LH Meyer, a research firm. "She's putting the ball in his court and saying, look, you're putting so much pressure on the Fed, and you want some control over nominees, well, here's a slot." REUTERS
Straits Times
3 hours ago
- Straits Times
More purring, more buying: Why bookstores showcase their pets
Sign up now: Get ST's newsletters delivered to your inbox A cat named Hank at the Literary Cat Co. in Pittsburg, Kan. Hank is known as the regional manager of the Literary Cat Co. UNITED STATES – Wander into Wild Rumpus Books in Minneapolis and you might miss the tawny cat napping in the window, spine pressed against the sunniest corner of the sill. Venture deeper into the cosy warren of picture and chapter books and you will begin to detect a theme, if not a whiff, of birdseed. That lazy feline known as Booker T. Jones turns out to be one of many beasts on the premises. Dave is a 27-year-old cockatiel who looks as if he applied too much coral rouge. Mo, a 26-year-old Barbary dove, roosts peacefully in a cage atop the sale shelf. There is also Newbery and Caldecott, a pair of gentle chinchillas; the Stinky Cheese Man, who, like all crested geckos, licks his own eyeballs; and Eartha Kitt, a jet-black Manx who politely recoiled from a visitor's hand while curled, cinnamon bun-style, in a mail bin. And, finally, there are 10 fish in a tank in the bathroom, all named for the children's book illustrators Mac Barnett and Shawn Harris. Their successors will be too, according to bookstore tradition. A menagerie like this has been a hallmark of Wild Rumpus since the store opened in 1992. When the original owner sold the business to four employees in 2024, the critters were part of the deal. 'They're the No. 1 draw,' said Ms Anna Hersh, a co-owner and animal care coordinator who visited the brood daily during the Covid-19 pandemic lockdown. 'We get a whole bunch of readers, but people really come to see the animals.' Top stories Swipe. Select. Stay informed. Singapore New vehicular bridge connecting Punggol Central and Seletar Link to open on Aug 3 Singapore Tengah facility with over 40 animal shelters, businesses hit by ticks Business Property 'decoupling' illegal if done solely to avoid taxes: High Court Singapore HSA investigating teen who was observed to be allegedly vaping in MRT train Singapore 60 years of building Singapore Asia 'Every day, we think about how to upgrade': China's factories see rise in robot adoption Sport Spurs captain Son Heung-min says he is leaving the English Premier League club Life Tastemakers: Burnt-out serial entrepreneur cooks up $16m success with Lau Wang Claypot Delights Docile dogs and aloof cats have long been fixtures of independent bookstores, as ubiquitous as free bookmarks. For the most part, they serve as quiet mascots – steadfast and loyal, deigning to have their heads patted or ears scratched while humans tend to the business of words. A child pets Eartha Kitt, a jet-black Manx, at Wild Rumpus Books in Minneapolis. PHOTO: ERIC RUBY/NYTIMES Now, thanks to social media, many stores have put themselves on the map with the help of little creatures, including some unlikely stars (bearded dragon, anyone?). The pairing makes sense: Books and animals both provide joy, companionship and windows into other worlds. The former are, admittedly, a lot tidier. At Bear Pond Books in Montpelier, Vermont, a Russian desert tortoise named Veruca Salt lords over the children's room from his 1.2m tank on the second floor. Ms Claire Benedict and her husband inherited the turtle – previously presumed to be female – from a school librarian. The store hosts an annual birthday party for Veruca, who is around 35, with games, cake and stories. The Tortoise And The Hare is a favourite. Like many bashful creatures, Veruca found his 'voice' on Instagram, where he has more than 2,000 fans. It is hard to say whether animals affect sales, but they certainly bring in foot traffic. 'You have people coming in saying, 'I think there's a tortoise here who I follow,'' Ms Benedict said. Moo and Chip fraternise with young readers at Scattered Books in Chappaqua, New York. PHOTO: VINCENT ALBAN/NYTIMES At Scattered Books in Chappaqua, New York, three litter-trained bunnies – Moo, Chuck and Chip – have the run of the place when they are not feasting on farmers' market lettuce in their triple-decker mansion with a view of the great outdoors. The bunnies have their own basket of pre-chewed books, but that does not stop them from occasionally sinking their teeth into a mystery or romance. 'We don't have books on the bottom shelves,' said Ms Laura Schaefer, who opened Scattered Books in 2017. 'The rabbits lend a nice comedic atmosphere. They don't make any sounds, but they can communicate.' Rabbits on a bookshelf at Scattered Books. PHOTO: VINCENT ALBAN/NYTIMES In 2018, Moo climbed up former President Bill Clinton's leg while CBS was interviewing him about his collaboration with novelist James Patterson on The President Is Missing (2018). And at the end of a bunny-centric story hour, Ms Schaefer said: 'A non-verbal autistic child tapped on my leg and signed, 'Thank you.'' Ms Schaefer makes hiring decisions with Moo, Chuck and Chip in mind. 'People come in and they're like, 'I love to read.' I'm like, 'How are you with rabbits?'' Of course, it is not all rabbit-themed tea parties and clever hashtags (#bringcelery). Recently, Scattered Books bid farewell to its first rabbit, Acorn, who was 14. 'It's very hard to break news of a bunny's death to the community,' Ms Schaefer said. 'Staff was crying, kids were crying and leaving notes.' At the Literary Cat Co in Pittsburg, Kansas, readers have the opportunity to adopt a pet while they shop. The store partners a local rescue organisation, hosting about seven cats at a time, along with three permanent feline 'employees': Hank, the regional manager; Scarlett Toe'Hara, the assistant regional manager (she is polydactyl); and Mike Meowski, the assistant to the assistant regional manager. A cat named Scarlett Toe'Hara at the Literary Cat Co. PHOTO: DAVID ROBERT ELLIOTT/NYTIMES Ms Jennifer Mowdy, the store's owner, described each cat's role, personality and origin story with the air of a matriarch ticking off successful grandchildren. Speaking of the upper respiratory illness that cost Mike Meowski an eye, she sounded stoic. He was a kitten; she was there for him. They soldiered through. Ms Mowdy created a glass alcove for allergic customers – and to deter escapees – and a 'kitty conference room' (accessible by cat door) for litter boxes. With regular scooping, four air purifiers and daily mists of Mrs Meyer's room spray, she said the scent of the store is neutral to positive. In the past 1½ years , the Literary Cat Co has facilitated 50 adoptions. 'We've only had one cat that didn't work out,' Ms Mowdy said. 'Too much fight in her.' Kittens tend to wreak havoc. Ms Mowdy prefers a mature animal of the 'Don't call me, I'll call you' variety. Felines are welcome to scale shelves and interact with readers as they please, which is their way. 'They get to practise being a good house cat,' Ms Mowdy said. 'They get socialised.' Occasionally, the right cat finds the right reader's lap. The rest is destiny, with the rescue organisation handling logistics and the Literary Cat Co simply making the introduction. Dog lovers, never fear. Plenty of bookstores cater to the canine crowd, including Parnassus Books in Nashville, Tennessee, where employees are welcome to bring their best friends to work. The current roster includes Miller, a French bulldog; Barnabus, a Cavalier King Charles spaniel; Winnie, a tiny hound mix; and Nemo, who is half Bichon and half poodle, according to novelist Ann Patchett, who owns the store. Her rules for shop dogs are simple: 'No barking. No biting. You have to like children and be patient, and you can't run out the front door.' While cats, birds, rabbits and lizards can be left alone overnight, dogs generally cannot, which makes them slightly more complicated as bookstore pets. But they can be excellent listeners; as Patchett pointed out, beginning readers feel comfortable testing their skills with a dog. The chinchilla brothers Newbery and Caldecott at Wild Rumpus Books in Minneapolis PHOTO: ERIC RUBY/NYTIMES Ms Hersh enjoys taking her Lhasa Apso, Penny, to Wild Rumpus, but she is leery of committing to an official shop dog. For now, she is happy with the book-to-animal ratio at her store, and the visitors who enjoy both. Booker T. Jones is an especially good cat to practise 'gentle' on, she said, although Wild Rumpus has a rule that patrons are not supposed to pick up the pets. Because it is impossible to predict the behaviour of children and animals, Ms Hersh added: 'We obviously have fun Band-Aids.' NYTIMES
Business Times
3 hours ago
- Business Times
World economies reel from Trump's tariffs punch
[WASHINGTON] Global markets reeled on Friday (Aug 1) after US President Donald Trump's tariffs barrage against nearly all US trading partners as governments looked down the barrel of a seven-day deadline before higher duties take effect. Trump announced late Thursday that dozens of economies, including the European Union, will face new tariff rates of between 10 and 41 per cent. However, implementation will be on Aug 7 rather than on Friday as previously announced, the White House said. This gives governments a window to rush to strike deals with Washington, setting more favourable conditions. Neighbouring Canada, one of the biggest US trade partners, was hit with 35 per cent levies, up from 25 per cent, effective Friday, but with wide-ranging, current exemptions remaining in place. The tariffs are a demonstration of raw economic power that Trump sees putting US exporters in a stronger position, while encouraging domestic manufacturing by keeping out foreign imports. But the muscular approach has raised fears of inflation and other economic fallout in the world's biggest economy. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Stock markets in Hong Kong, London and New York slumped as they digested the turmoil, while weak US employment data added to worries. Trump's actions come as debate rages over how best to steer the US economy, with the US Federal Reserve this week deciding to keep interest rates unchanged, despite massive political pressure from the White House to cut. Data Friday showed US job growth missing expectations for July, while unemployment ticked up to 4.2 per cent from 4.1 per cent. On Wall Street, the S&P 500 dropped 1.6 per cent, while the Nasdaq tumbled 2.2 per cent. Political goals Trump raised duties on around 70 economies, from a current 10 per cent level imposed in April when he unleashed 'reciprocal' tariffs, citing unfair trade practices. The new, steeper levels listed in an executive order vary by trading partner. Any goods 'transshipped' through other jurisdictions to avoid US duties would be hit with an additional 40 per cent tariff, the order said. But Trump's duties also have a distinctly political flavour, with the president using separate tariffs to pressure Brazil to drop the trial of his far-right ally, former president Jair Bolsonaro. He also warned of trade consequences for Canada, which faces a different set of duties, after Prime Minister Mark Carney announced plans to recognise a Palestinian state at the UN General Assembly in September. In targeting Canada, the White House cited its failure to 'cooperate in curbing the ongoing flood of fentanyl and other illicit drugs', although Canada is not a major source of illegal narcotics. By contrast, Trump gave more time to Mexico, delaying for 90 days a threat to increase its tariffs from 25 to 30 per cent. But exemptions remain for a wide range of Canadian and Mexican goods entering the United States under an existing North American trade pact. Carney said that his government was 'disappointed' with the latest rates hike but noted that with exclusions, the US average tariff on Canadian goods remains one of the lowest among US trading partners. 'Tears up' rule book With questions hanging over the effectiveness of bilateral trade deals struck, including with the EU and Japan, the outcome of Trump's overall plan remains uncertain. 'No doubt about it, the executive order and related agreements concluded over the past few months tears up the trade rule book that has governed international trade since World War II,' said Wendy Cutler, senior vice president of the Asia Society Policy Institute. On Friday, Trump said that he would consider distributing a tariff 'dividend' to Americans. Notably excluded from Friday's drama was China, which is in the midst of negotiations with the United States. Washington and Beijing at one point brought tit-for-tat tariffs to triple-digit levels, but have agreed to temporarily lower these duties and are working to extend their truce. Those who managed to strike deals with Washington to avert steeper threatened levies included Vietnam, Japan, Indonesia, the Philippines, South Korea and the European Union. Among other tariff levels adjusted in Trump's latest order, Switzerland now faces a higher 39 per cent duty. AFP
