We explore the investment opportunities amid a constructive yet fragile backdrop for financial markets.
Key Points
- US trade policy, mixed economic signals, and fiscal uncertainty is driving equity market volatility.
- While equity markets were resilient going into the summer, we believe volatility may persist.
- Certain investing styles, such as value, can offer a defensive tilt that can help enhance portfolio resilience.
- Diversification into segments with structural tailwinds such as infrastructure and international equities, may help balance core allocations to broad equity strategies.
In today’s uncertain environment, understanding what’s driving markets is key to identifying risks and opportunities. This report is part of a series looking at the forces shaping global markets. Prior reports explored macroeconomic backdrops and the fixed income space. In this edition, we examine the equity landscape.
Equity markets have experienced renewed turbulence in recent months. Investors are navigating a complex environment shaped by shifting trade policy, inconsistent macroeconomic data, softening labor market and rising fiscal pressures. These forces are fueling uncertainty around growth expectations, inflation dynamics and the future path of interest rates. In 2025, the Economic Surprise Index has oscillated between positive and negative, suggesting a more uncertain macro environment.
FIGURE 1.
Economic Surprise Index
The Economic Surprise Index tracks whether data releases exceed or missed consensus forecasts.
Above 0 means data surprised on the upside, below 0 means data missed expectations.
Source: Citi, BNY Investment Institute. Data as of July 17, 2025. Chart for illustrative purposes only.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell this security, country or sector. Please note that strategy holdings and positioning are subject to change without notice. MAR007415 Exp 08/30. For additional Important Information, see below.
Important Information
For Institutional Clients Only. Issued by Newton Investment Management North America LLC (“NIMNA” or the “Firm”). NIMNA is a registered investment adviser with the US Securities and Exchange Commission (“SEC”) and subsidiary of The Bank of New York Mellon Corporation (“BNY Mellon”). The Firm was established in 2021, comprised of equity and multi-asset teams from an affiliate, Mellon Investments Corporation. The Firm is part of the group of affiliated companies that individually or collectively provide investment advisory services under the brand “Newton” or “Newton Investment Management”. Newton currently includes NIMNA and Newton Investment Management Ltd (“NIM”) and Newton Investment Management Japan Limited (“NIMJ”).
Material in this publication is for general information only. The opinions expressed in this document are those of Newton and should not be construed as investment advice or recommendations for any purchase or sale of any specific security or commodity. Certain information contained herein is based on outside sources believed to be reliable, but its accuracy is not guaranteed.
Statements are current as of the date of the material only. Any forward-looking statements speak only as of the date they are made, and are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results could differ materially from those anticipated in forward-looking statements. No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment and past performance is no indication of future performance.
Information about the indices shown here is provided to allow for comparison of the performance of the strategy to that of certain well-known and widely recognized indices. There is no representation that such index is an appropriate benchmark for such comparison.
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