Markets began Q4 steady despite the US government shutdown on 1 October, which halted key data releases including the September jobs report. Investors largely viewed it as temporary and focused on the Fed’s next steps.
In late September 2025 we’ve seen a softening US dollar as emerging-market equities rally. The iShares MSCI Emerging Markets ETF (EEM) has climbed to multi-month highs around $53.4 (near its 52-week peak of $53.67) while the US Dollar Index (DXY) has backed off recent highs (~98.6) to test lower support (around 97.6).
Investors often think of health care as a “safe harbour” – people need medicine whether the economy booms or busts. But the picture in Q2 2025 is mixed. Over the past year health-care shares have lagged the wider market, leaving valuations near multi-year lows. That has caught some bargain-hunters’ eye: the S&P 500 Health Care index was flat in early 2025 while the S&P 500 gained around 7%. At the same time, the sector is home to new blockbuster drugs and AI-driven innovation. In short, health care is playing both roles – steady defensive sector and potential growth story. So which wins out?
Markets spent most of last week stuck between two narratives: inflation that remains stubbornly high and a Fed that finally made its first cut since late 2024. August’s PCE numbers came in as expected with core prices up 0.3% on the month, 2.7% YoY. Not exactly encouraging, but not worse than feared either. It was just enough to calm nerves after the cut, though investors were left second-guessing whether this was the start of an easing cycle or simply a cautious adjustment.
Stock markets often move in waves – one sector cools as another heats up. It’s how markets rotate. Recently, the tech-heavy “Magnificent Seven” names have lost steam while cyclicals like energy and industrials have been rallying. This is why traders are eyeing relative strength charts. These charts show which sectors are outperforming and hint at who might lead next. For example, a recent analysis noted consumer discretionary and communications stocks are firmly in the “leading” quadrant on a relative rotation graph, whereas tech is rolling into “weakening” territory. Healthcare is meanwhile just beginning to climb from lagging to improving, suggesting its turn could be near.
