Rotation Pause

Issue 44;

• Global rotation pauses as big tech hangs on.
• No leading countries or sectors make this a stock picker’s market.
• A new high in copper.

In financial markets, money behaves like water, as it will always find somewhere to go and fill the cracks. That describes relative performance, i.e., what is working and what is not. The amount of water in the system describes market performance, i.e., are stocks rising or falling?

Global Trends is a deep dive into global equities. The aim of this analysis is to better understand which countries, sectors, industries, and stocks are driving market returns. Not only does it help investors identify opportunities, but it also highlights the risks. We try to condense as much important information as possible, focusing on what really matters each week. Embrace this as a weekly discipline, and you’ll soon have a much better understanding of global financial markets.

The World Index regains a ByteTrend Score of 5, but not quite a new high. Many of the largest companies remain strong, but only Alphabet and Walmart made relative highs last week. 

World Index – Developed Markets – Daily

Global Winners

The world’s strongest stocks make up only 15% of the total. It’s a tricky time for alpha seekers. There are no overwhelming regions or sectors, just pockets of strength. We highlight copper, mining, and auto.

Copper

The price of copper makes an all-time high. Plotting it against gold reminds us how closely correlated these metals are. The spread has never been so wide, which either implies that gold is too high, or that copper plays catch-up. History suggests a 2x move in copper, perhaps more.

Notable stocks with new highs include Southern Copper, Anglo Gold Ashanti, and Antofagasta.

Autos

We have heard about the death of German manufacturing, European manufacturing, and the Western car industry many times in recent years. European regulation is being outdone by Chinese innovation and a one trillion-dollar trade surplus. Incumbent petrol carmakers are stuck in the innovator’s dilemma as electric vehicles take an ever-larger share of the market.

However, in recent weeks, the traditional auto sector has been making a comeback. GM and Hyundai have both made a CAPR score of 5 in the last fortnight. Volvo, Mercedes, and Porsche all made new 30-week CAPR highs this week, while BMW, Stellantis, and Volkswagen are all a percent or two away from doing the same. Hyundai has surged in December, as partnerships with Nvidia and others on vehicle intelligence and automation are seeing it tap into the AI tailwind.

Service, repair, tires, and parts companies are all starting to move as well. We recommended one of them last week in Venture. European Auto and Components have fallen behind the World Index since the pandemic, but the recent moves suggest a catch-up could be on the way.

Global Losers

A portfolio of the weakest relative trends has a European slant, but not materially so. The revelation is that 37% of all stocks are in bear trends relative to the stockmarket, and 15% are in bullish trends, as shown in the table above. Real Estate and Consumer Defensive stocks remain weak, which is a feature of this bull market. No doubt they will improve when the bull comes under pressure.

REITs

Both American and European REITs are weak relative to the index. Like Autos, owning them has cost investors more in relative terms than price terms, as they’ve been flat while the index marched ahead. That’s the power of relative performance.

Real Estate is waiting for interest rates to fall, but the talk in London is that offices are fully occupied. Prime offices are fully let, rents are rising, and new supply is limited. London is not dead yet.

Consumer Defensives

Consumer Defensives are also struggling to shake off their weakness. They brightened during the November rotation, but with the World Index back to a ByteTrend Score of 5, that is on pause. Unilever’s spin-out of the Magnum Ice Cream company today is leading the sector’s weakness, but its portfolio of brands is second to none.

Industry Groups Relative Performance

Technology has bounced in hardware but not software, where AI is seen as a greater threat. The Software as a Service (SaaS) was the trend of the 2010s, but the winners of that movement are the losers today (Adobe, ServiceNow, SAP, and Workday). If the AI trend weakens, they could recover, but their long-term future is less clear.

Media and Entertainment is weak, and the sector is about to enjoy a period of regulatory and political scrutiny as Netflix tries to buy Warner Bros. Trump has mused about the monopoly risk, and Netflix shares have fallen.

There are no countries with very strong trend scores. Nada, none. Worse still, there are fewer with neutral scores, meaning over half have negative scores. This means investors will struggle to beat the market with geographical asset allocation decisions.

It’s a bit better for industries, with just two industries showing strong or very strong trends, namely conglomerates and mining. The number of industries moving to neutral is also in decline, meaning 62% of industries are ranked bearish. This is a focused market, with twice as many losers as winners at the stock level, and few leading countries or industries.

Leading Trends with New Highs

These stocks are trading at the 30-week CAPR highs with a ByteTrend Score of 5. All charts shown are CAPR rebased to 100.

General Motors

GM has outpaced its auto peers in recent years, doubling over the last three years, while Ford is up only 20% and Volkswagen is down 20%. It has even outperformed Tesla this year. Its Chevrolet and GMC brands have been leading the way, with its 12% sales growth in H1 2025 beating the industry’s average of 4%. It has been the number one seller of pickup trucks in America for six years running.

New Leading Trends

These stocks are trading at the 30-week CAPR highs with a ByteTrend Score of 5, except they are new trends this week, having previously has a score below 5. All charts shown are CAPR rebased to 100.

PACCAR

In keeping with the Auto theme, PACCAR, a truck maker, is a new leading trend this week. It dominates the trucking industry, with strong brand loyalty and high profitability backed by a very steady aftermarket and parts business.

Emerging Trends

These stocks are trading at the 30-week CAPR highs with a ByteTrend Score of less than 5. They don’t have to be in an uptrend, just emerging. All charts shown are CAPR rebased to 100.