Photo Stephen Li Jen © Eurizon

By Stephen Li Jen, CEO of Eurizon SLJ Capital

Negative macroeconomic and geopolitical news is overshadowing the more encouraging microeconomic and fundamental signals. Iran has once again become the main driver of financial markets, as the Fed is now involved. While the United States may have been emboldened by its resounding success in Venezuela, Iran, in my view, may be drawing encouragement from Ukraine’s resilience in the face of Russia. In March, April, and May, the upper side of the “K” — the technology sector — was strong enough to move without being disrupted by the lower side of the “K” — the war in Iran. But it is now being “contaminated” by the war in Iran, mainly because the technology sector is now more mature and more richly valued.

Despite exceptionally strong financial results, both in revenue and earnings, the biggest names in cutting-edge technology have been unable to enjoy sustained gains in their share prices. For now, market sentiment has shifted from an “innocent until proven guilty” approach to equities to a “guilty until proven innocent” mindset. We will see how long this lasts, because earnings remain exceptionally robust. Investors may need a pretext to buy, using developments coming out of Iran as a catalyst.

Europe Could Eventually Resort to Trade Measures Against China

Weak data from Germany’s industrial sector continue to dominate headlines, and at the current pace, Germany and much of Europe risk being deindustrialised by China.

I was reading a book in a completely different field — the biography of Isaac Newton — when I came across the word “inert.” It occurred to me that today, everything in the world seems connected and reacts to everything else, except Europe: Europe has remained inert, largely unmoved by most provocations.

However, China’s competitiveness, supported in part by government subsidies and a weak yuan, is now overwhelming and poses a threat to Europe. Trade measures, in my view, may no longer be a distant risk.

Investment Strategy: Was It Too Early to Turn Defensive?

Thinking back to the World Cup match England lost against Argentina, I found myself wondering whether, with a 1-0 lead at half-time, England may have adopted a defensive stance too early and ultimately paid the price. Is there an analogy for investing in 2026, where after a strong rally in equities in the first half, investors could turn defensive prematurely?

Find all our Strategic Case articles