Despite overall global market stability in February, significant underlying shifts occurred. Resurfacing geopolitical risks, declining post-election sector winners, and reevaluation of growth expectations amidst stretched valuations contributed to market volatility. However, this divergence presents opportunities for discerning investors.
Initial post-election optimism experienced a sharp reversal. Sectors that rallied after the election faced pressure, and assumptions about a market-friendly Trump presidency were challenged. Market darling Nvidia and the broader Magnificent 7 large-cap US growth stocks experienced corrections. Small-cap US stocks also struggled, defying expectations of benefiting from Trump's "America First" stance.
Longstanding US market dominance shifted as investors questioned lofty equity valuations amid concerns about the economic outlook and consumer confidence. European markets outperformed, and Chinese tech stocks surged, marking a departure from the American exceptionalism of the past decade.
The White House's use of tariffs contributed to policy uncertainty, unsettling markets and fueling volatility. Unpredictable policymaking and concerns about slowing growth and inflation created challenges for investors. Geopolitical tensions also escalated, with a public disagreement between the Ukrainian and US presidents leading to a pause in US aid to Ukraine and increased European defense spending.
While these issues may dominate headlines, it's crucial for investors to maintain a long-term perspective. Selling during uncertainty can be detrimental to wealth creation. Heightened volatility often presents opportunities, as sharp market moves can create mispriced assets. The recent sell-off in popular stocks highlights the potential for finding opportunities in overlooked areas of the market.
What can you do now and how can Aurora help?
Take a moment to check your Aurora investment option matches the timeframe for when you wish to access your funds, your life stage and financial goals.
Avoid checking your balance too often, remember markets go up and down and KiwiSaver is a long-term game.
If you can, keep contributing as your contributions will benefit from compounding returns that can lead to more gains in a market recovery.
If you’re concerned about the current market volatility and want to check whether you're in the right investment option for your circumstances, our KiwiSaver advisers are here to help guide you. Please contact your adviser or our Client Care Team at hello@aurora.co.nz or by phone at 0800 242 023.
Let’s ensure your KiwiSaver savings are working hard for you, thank you for being part of the Aurora KiwiSaver Scheme.
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DISCLAIMER
This information is provided in a general nature only and should not be construed as or relied on as financial advice. This is not a recommendation to invest in a particular financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any investment decisions.
Past performance is not a reliable indicator of future performance. The value of your investment may go up and down.