MARKETS IN A NUTSHELL — FOR FEBRUARY 2025

Investors appeared to fall out of love with US tech this February and the US stock market flashed warning signs as post-election investor optimism clashed with some harsh economic and geopolitical realities. The Magnificent Seven started to sputter, weak data fuelled fears of US economic slowdown, President Trump barrelled ahead with heavy tariffs and Europe was left reeling from Trump’s rapprochement with Russia. 

Trump’s new blanket tariffs on steel and aluminium, as well as on all Canadian and Mexican goods, and the increased tariffs on Chinese goods rattled markets. Meanwhile, US economic indicators suggest a slowdown: consumer confidence hit its lowest level since 2021, GDP growth slowed to 2.3%, and inflation eased slightly to 3%, while remaining well above the US Federal Reserve’s target. Even the labour market weakened — with the spike in jobless claims partly due to federal layoffs linked to Elon Musk’s DOGE activity.

Investors shifted away from the US dollar and US stocks and instead started to favour bonds — with yields falling — and undervalued markets like Europe, the UK and China. The US S&P 500 Index fell 1.4% and the tech-focused Nasdaq exchange dropped 4.0%, as big tech lost favour. In contrast, European and UK bourses rose 3% in February and the MSCI China Index surged 12% to achieve a 35% gain for the past year. 

On the commodities front, prices rose after Trump announced a 25% tariff on steel and aluminium imports, and threatened tariffs on copper. Traders rushed to secure metals ahead of the tax hikes, pushing prices higher. Gold bullion set a new high close to the US$3,000 mark, while oil prices slid 5% on concerns over slowing global growth.

The Foord global funds achieved stand-out returns in the month given their preference for better geographic diversification and focus on quality. The Foord Global Equity Fund was positive when most of the opportunity set and peer group posted losses in the month. The conservative Foord International Fund was resilient, gaining close to 3% amidst the turmoil. The Foord Asia ex-Japan Fund gained over 8%. 

For all our handwringing over the unpredictability of world leaders, it’s important to remember that company fundamentals remain more stable than headlines suggest. Our disciplined approach — focusing on assets with robust growth prospects, prudent valuations and offering a margin of safety — remains key. Volatility also creates opportunities, and our cash positions provide us with the flexibility to act swiftly when attractive opportunities emerge.

We remain confident that, by staying the course, we will continue to protect and compound your capital over full market cycles.