Equities: Sector rotations shape summer performance – Danske Bank

Danske Research Team notes that equity indices have been broadly unchanged over the summer, but sector rotations have been significant. Higher Oil prices supported energy stocks, while within technology, software has outperformed and semiconductors have lagged. Regional equity performance has mirrored these dynamics, with Emerging Markets weaker and Norway, Europe and Sweden showing relative strength.

Rotations drive sector and regional moves

"Equity indices have been broadly unchanged over the summer, but beneath the surface the rotations have been substantial. Higher oil prices naturally supported energy stocks, but equally important has been another significant rotation within the technology sector."

"Unlike earlier this year, software has materially outperformed while semiconductors have lagged. This has not reflected disappointing earnings. Instead, investor attention has again centred around the uncertainty surrounding the longer-term AI capital expenditure cycle."

"Regional equity performance has mirrored these sector dynamics. Emerging Markets have underperformed while Norway has benefited from higher energy prices."

"Interestingly, both Europe and Sweden have delivered relative outperformance throughout the geopolitical escalation, a notable contrast to previous episodes earlier this year."

"This morning sentiment is improving once again as lower oil prices support risk appetite. South Korea is the notable exception with equities down around 6%, while both US and European futures indicate another opening close to fresh all-time highs."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)