In the world of equity markets, economics often plays a significant role, although equity analysts sometimes tread their own path. Recent shifts in economic risk perceptions have influenced the movements in US equity markets. At the dawn of 2025, the US economy appeared robust, with no evident signs of the imbalances usually foreshadowing recessions. Consumer confidence was high, with little anxiety over job security, and financial stability broadly reflected among consumers.
Despite these solid foundations, emerging risks now cloud the future outlook. US consumers and businesses are increasingly uncertain, which could be highlighted by the upcoming NFIB small business sentiment survey—often viewed through a partisan lens. Any decline in sentiment could be worrisome, potentially prompting shifts in policies under President Trump due to market reactions.
On the other side of the globe, Japan’s fourth quarter GDP figures were adjusted downwards, revealing weaker private consumption. This recalibration serves as a reminder that economic metrics lack precision in real time, particularly as Japan traditionally reports annualised data.
In the UK, February’s BRC shop sales showed a slowdown, with only a trio of economists predicting this trend, signalling a lack of consensus. Non-food sales particularly dragged down the figures, which may reflect deeper trends of price discounting rather than robust consumer demand.
This article explores the current state of equity markets influenced by economic perceptions, highlighting consumer confidence and recent economic data. It notes the importance of upcoming sentiment surveys, adjustments in Japan’s GDP, and the slowdown in the UK retail sector as key indicators of potential risk.
In summary, the equity markets are currently at a crossroads, influenced significantly by economic perceptions and consumer confidence. Notable indicators, including the NFIB survey and developments in Japan and the UK, highlight the ongoing uncertainty within global economies. Analysts and policymakers must remain vigilant to these shifts as they may dictate future market behaviour and economic strategies.
Original Source: www.ubs.com
