FNArena’s Weekly Insights – May 12 2025
In this week’s Weekly Insights:
Awaiting The Real World Ramifications (continued)
By Rudi Filapek-Vandyck, Editor
Holding out a proverbial carrot in front of global financial markets is a highly effective strategy.
It worked for the first Trump administration, as it has worked on many other occasions too. After we all digested the shock of an all-out tariff attack on global trade, markets can now bask in the positive news flow towards a less trade-restrained environment for the US economy and its many trade relations.
The most visible consequence is that equity indices are either at or near their all-time record high, or quickly recapturing most of the ‘correction’ that followed upon the first tariffs shock.
In Australia, the ASX200 is back into positive territory year-to-date, led by defensive segments and with energy, healthcare and small caps as notable laggards. Shares in Wesfarmers ((WES)) and Hub24 ((HUB)) are both setting new all-time highs, both coincidentally around $80.
If we didn’t know any better, we might conclude the outlook for markets has now been de-risked, but that might prove too simplistically optimistic, even though recent news flow has surprised to the upside, and this includes corporate updates both domestically and in the USA.
Profits In The USA
Without getting too deeply into the finer details, but the current quarterly results season in the US has, overall, supported the strong bounce in share prices.
Doom scenarios and bearish forecasts aside, corporate America has clearly not been torpedoed by White House antics and the world’s largest megacaps have mostly surprised to the upside, including through confidence and ongoing investments into GenAI.
Equally important though, most positive outcomes are situated in Growth and AI-levered segments, with smaller cap companies noticeably revealing more risk and disappointments.
