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First Up

UPDATED 27/05/2025 09:35

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The ASX200 ended flat in a surprisingly quiet session on Monday, considering the market uncertainty around tariffs towards the EU and Apple, plus the recent volatility with the longer-dated bonds. The local index flat-lined in a very tight 0.3% trading range as investors and traders placed bets on the stock & sector level instead of the underlying market. The winners and losers were pretty evenly matched as the market patiently awaited the local CPI inflation read on Wednesday and Nvidia’s much anticipated quarterly earnings report after market close, Thursday morning our time.

We remain bullish through 2025, but the next few weeks will likely focus on stock and sector rotation as we head into the EOFY.

Donald Trump’s social media posts are having an increasingly diminishing influence across financial markets as the TACO theory takes hold: “Trump always chickens out!” It’s a dangerous game to believe that Trump 2.0 will ultimately have a limited impact on stocks, but the ASX is now well above when “Liberation Day” rolled markets back in April. Many investors are sitting on cash, missing the unloved bull market unfolding before their eyes. This month’s Bank of America Fund Managers Survey illustrates why there continues to be “buyers into dips”:

Fund managers were a net 38% underweight on US stocks, the most in two years: a bearish enough read to suggest the “path of most pain” remains on the upside.
Begrudging upgrades have followed the recovery by stocks: Goldman Sachs raised its 12-month target for the S&P 500 to 6,500 from 6,200, implying gains of another 12% from current levels.

US markets were closed overnight for Memorial Day, although the Futures were trading with the S&P 500 up +1.3% after the European Union said it agreed to accelerate negotiations with the US to avoid a transatlantic trade war. European markets enjoyed a similarly strong session with the EURO STOXX 50 finishing up +1.3%, and the German DAX +1.7%; the UK was closed for a Public Holiday.