Investors urged to rebalance as price momentum dominates

After a powerful rally in gold and technology stocks, investors are looking for opportunities in overlooked corners of the market. Despite warnings that valuations may be stretched, global equities remain supported by healthy profit margins, robust earnings growth and a favourable interest rate outlook.

BNN Bloomberg spoke with Lesley Marks, chief investment officer at Mackenzie Investments, who says industrials, utilities and select global sectors could benefit from renewed capital spending, productivity gains and structural shifts in fiscal policy.

Key Takeaways

• AI-driven enthusiasm has concentrated gains in a few large-cap tech names, but opportunities remain across global markets.
• Industrials and utilities are well positioned to benefit from stronger U.S. capital spending and higher electricity demand.
• European equities are gaining appeal with renewed fiscal stimulus, defence investment and strength in pharmaceuticals.
• The Federal Reserve is expected to cut rates again as the U.S. labour market softens despite sticky inflation.
• Consumer spending in the U.S. remains resilient overall, even as lower-income households face greater financial strain.

Read the full transcript below:

ANDREW: Gold has been on a record-breaking run, and the Bank of England, the venerable Old Lady of Threadneedle Street, is warning that tech stocks may be overvalued and could contribute to financial instability. Where should investors look for opportunities in other parts of the market? We’re joined by Lesley Marks, chief investment officer at Mackenzie Investments. Lesley, great to see you. We’ve all heard about the Mag 7 ad nauseam. Are you seeing opportunities elsewhere?

LESLEY: Great to be here with you, Andy, this morning to talk about what’s happening in the markets. Time and again, I keep hearing people make comparisons to an equity bubble, echoing the 1999–2000 tech boom. Some areas of the market are certainly frothy — we’ve seen huge focus on a few sectors, particularly AI. Any company making an AI-related announcement tends to attract a lot of attention and often sees a surge in its share price. But it’s a big market out there, and when we look beyond the headlines, there are still plenty of opportunities.

The first point I’d make is around valuation. While aggregate valuations for the S&P 500 may look extended versus history, there’s justification given the much higher operating and net margins companies are achieving now compared with the past. That somewhat supports the higher multiples.

The second point is that when you look at global equity markets, the majority of the move in the U.S. has actually been driven by earnings growth, not just valuation expansion. That gives me comfort overall. Other markets have seen more of a valuation catch-up because of all the attention on U.S. equities. It’s been nice to see enthusiasm for equities spread more broadly around the world.

As for where we see opportunities, AI is obviously a powerful long-term theme, but because it has attracted so much attention, we’re focusing more on the areas that will benefit from its effects — such as productivity gains and renewed capital investment in the United States. Examples include industrials and utilities, given rising demand for electricity. We’re also watching how capital spending in Europe is creating a fiscal tailwind there, while Asian equities have also become more interesting lately.

ANDREW: So when you say industrial companies, you mean those that make electrical equipment, not necessarily power generators?

LESLEY: Broadly speaking, yes. Industrial firms often have large capital expenditure requirements as part of their business models. With the One Big, Beautiful Bill and the related tax incentives encouraging capital spending — including investment tied to the onshoring trend in the U.S. — we think that will strongly benefit the industrial sector.

ANDREW: Talk to us about Europe. France faces challenges with government debt and spending. Are you still seeing opportunities there?

LESLEY: The opportunity in Europe isn’t limited to France. There’s a lot of potential elsewhere, particularly in defence. Increased global focus on security and rearmament as we deglobalize will remain important. There’s also fiscal support coming from Germany and across the European Union. Europe has been overlooked as investors chased the Mag 7 in the U.S., but we’re now seeing renewed interest. The pharmaceutical sector is another strong area. Overall, several sectors in Europe that have long been ignored are starting to show leadership.

ANDREW: And you think the Federal Reserve is likely to cut rates at least once more?

LESLEY: I do. That’s a very topical issue right now, especially with the government shutdown and concerns the Fed may lack fresh labour data from the Bureau of Labor Statistics. But given the Fed only cut by 25 basis points at its last meeting — which isn’t a major policy move — I think they’ll be motivated to cut another 25 basis points based on the data available. The U.S. labour market is clearly softening, which should continue to support easing. Despite some stubborn inflation, the labour data suggest the Fed has room to move.

ANDREW: We’ve been hearing for over a year that lower-income consumers in the U.S. are struggling more than higher earners. Does that affect your investment strategy?

LESLEY: That’s an interesting question. We would have expected to see more weakness in the U.S. consumer by now. Consumers make up roughly 70 per cent of the economy, and many expected spending to roll over given higher costs and tariffs. Instead, what we’ve seen is that the wealth effect among higher-income households has more than offset the slowdown among lower-income consumers. So, while many households are worse off, the overall consumer spending and retail numbers still look resilient. It’s a reminder that headline data don’t always tell the full story.

ANDREW: Lesley, thank you very much.

LESLEY: Thank you, Andy.

ANDREW: Lesley Marks, chief investment officer at Mackenzie Investments.

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This BNN Bloomberg summary and transcript of the Oct. 8, 2025 interview with Lesley Marks are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.