Market Update 05/2025 | Volatility Persists, but US Equities Gain Favor
May: Volatility Persists, but US Equities Gain Favor
Selective Tariffs and AI Beneficiaries Support US Outlook Amid Policy Uncertainty and Elevated Risks
In May 2025, T&T International maintains a Neutral stance on global equities but upgrades its view on US equities to Attractive, driven by pro-growth policy shifts and selective tariffs. While market volatility remains high, a perceived “Trump put” reduces the likelihood of severe downside risks. Corporate earnings for 2025 are now expected to remain flat, with modest growth projected for 2026. AI, utilities, communication services, and healthcare are highlighted as favored sectors, with India and Taiwan as preferred international markets.
In fixed income, high-grade and investment-grade bonds are rated Attractive, while emerging market and high-yield bonds remain Neutral. Gold retains its role as a preferred diversifier amid geopolitical and market instability. In currencies, JPY and AUD are favored, whereas USD, EUR, CHF, and GBP are held Neutral. The CNY remains Unattractive due to ongoing structural concerns.
The “Topic of the Month” explores how economic realities—like supply chain dependencies and debt financing—constrain rapid policy shifts, particularly in the US-China trade conflict. These limitations may temper long-term disruption risks, though near-term market swings are expected to persist. Key risks include earnings pressure, trade volatility, and policy uncertainty.
