Ben Powell on Market Volatility: Riding the global investment seesaw
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A Market in Motion
BlackRock Investment Institute's APAC Investment Strategist Ben Powell in an interview to ET Now acknowledged market volatility and emphasized that investors must adapt to this new reality. He advised staying calm, avoiding overreaction to short-term movements, and instead focusing on long-term structural shifts to guide investment decisions.
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Market Optimism Returns
Despite ongoing global concerns, market sentiment has recently turned more positive. One of the key contributors has been the continued strength of the AI sector, which is driving growth particularly in the US. India is also benefiting from favorable developments, such as falling oil prices and a more balanced geopolitical position. Notably, the S&P 500 has achieved a nine-day winning streak — a milestone not seen since 2004 — reflecting the strength of current market momentum.
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Why Are Equities Rallying?
Ben Powell attributed the current equity rally to strong earnings, especially from major tech companies. These firms have consistently outperformed expectations, fueled by the ongoing AI boom. Despite widespread concerns, the hard data — particularly earnings reports — has shown resilience. This earnings strength is now the core reason behind the market's recent upswing, rather than sentiment alone.
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Emerging Markets – Not a Monolith
Powell stressed that the global equity landscape has changed dramatically over the past decade. Today, investors need to be more selective and nuanced, especially when considering emerging markets. These markets are not uniform, and in a world increasingly fractured by geopolitical and economic divisions, picking the right markets is essential. Both the US and India stand out as strong contenders in this environment.
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India – Rising with the Tide
India is emerging as a key beneficiary of current global shifts. The country stands to gain from the recent decline in oil prices, which supports its macroeconomic stability. Additionally, India’s unique geopolitical stance allows it to negotiate favorable trade arrangements with multiple partners. The Reserve Bank of India may also find more flexibility in its monetary policy, further strengthening the country's economic outlook.
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Risks on the Horizon
Despite recent market gains, risks remain. Powell pointed out that the US economy is still expected to face a contraction, partly due to unresolved trade tensions and potential new tariffs from the US administration. Structural challenges such as labor market disruptions and supply chain issues are also likely to affect corporate earnings and broader economic stability in the coming quarters.
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Navigating Uncertainty
Acknowledging the unpredictable nature of the current environment, Powell urged investors to accept that we are no longer in the era of stability seen a decade ago. With rising uncertainty driven by AI, geopolitics, and trade conflicts, the key is to stay grounded and focus on the fundamentals. Even though the headwinds are real, Powell believes the tailwinds — particularly from AI — are powerful enough to keep certain sectors moving forward.
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Final Takeaways
Markets are being buoyed by strong corporate earnings, especially in the tech sector, and by transformative forces like artificial intelligence. India continues to benefit from global rebalancing and macroeconomic tailwinds. However, challenges such as an expected slowdown in the US economy and unresolved trade issues remain. In this complex environment, Powell advises sticking to long-term investment principles and recognizing where sustainable growth is likely to emerge.