Investors pivot to defensive stocks as markets enter a ‘state of alert’

Investors are shifting towards defensive shares such as healthcare and consumer staples, signalling heightened caution about market risks. Strategists say the move has been sharp, even as they see company fundamentals as broadly healthy.

HSBC’s Alastair Pinder called recent market moves “vicious” and potentially overdone, pointing to US semiconductor valuations after a 45% fall since June. He said Walmart was trading at 40 times forward earnings, near a record high, while Nvidia was at 13 times, near a record low. AJ Bell’s review of 11 S&P Global 1200 super-sectors found healthcare and consumer staples among the strongest performers in the second half of 2026 so far, behind energy, which has benefited from rising oil prices following the US-Iran war.