Key Market Insights: ASX 200, US-China Trade, and Investment Opportunities

May 19, 2025

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In this episode of Equity Mates, Bryce and Ren dissect market movements, sector-specific trends, and actionable investment strategies. Below are the key takeaways:

Market Performance Overview

ASX 200 and S&P 500 have delivered muted YTD returns of 1% and 0.5%, respectively, despite macroeconomic noise.
Headlines often exaggerate volatility; focus on long-term fundamentals over sensationalism.

US-China Trade De-escalation

Tariffs reduced significantly: US cut from 145% to 30%, China from 125% to 10%.
Non-tariff measures eased, including China lifting Boeing aircraft purchase bans and suspending investment restrictions on US firms.
Boeing secured a $96bn deal with Qatar Airways, adding to its 11-year backlog. Stock surged 30% in a month.

Australian Sector Updates

Mortgage Wars: Over 24 lenders cut fixed rates; CBA reduced variable rates to 5.84%. NAB forecasts six RBA rate cuts in 12 months.
Retail Price Wars: Woolworths and Coles slashed prices on 400+ and 680+ items, respectively, with Coles offering deeper cuts (avg. 21% savings).
Xero’s Mixed Results: Revenue up 23%, NPAT up 30%, but lost 22,000 US users. Trading at 131x P/E, highlighting valuation risks.

Standout Stocks

TransMedics (TMDX): Up 30% post-discussion.
Coinbase: Gained 49% in a month amid S&P 500 inclusion rumours.
Super Micro: Surged 40% after a $20bn Saudi data centre deal.

Portfolio Review: Kelly’s Tech-Heavy Holdings

Adam Doors analysed a community portfolio:

Strengths: Global exposure via ETFs (30%), quality US tech (Amazon, Nvidia).
Weaknesses: Overweight speculative stocks (e.g., Carnegie Clean Energy, IGO Lithium). Advised to trim losers and diversify into index funds (e.g., IVV).
Rule of 40: Xero’s 44% score (revenue growth + profit margin) signals healthy SaaS metrics.

Currency-Hedging Strategy

David’s question on IVV (unhedged) vs. IHV (hedged) S&P 500 ETFs:

IVV benefits from a falling AUD; IHV mitigates currency risk if AUD rises.
Timing currency moves is complex; transaction costs and tax implications favour a “set-and-forget” approach.

Actionable Insight: Prioritise core portfolio stability over speculative currency plays. For tactical trades, allocate a separate sleeve to FX.

“On balance, the financial system subracts value from society.” – John C. Bogle

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