Analyst Weekly, Might 19, 2025
World markets are flashing indicators that matter for the highway forward, and savvy buyers are paying consideration. From AI enlargement into new areas to retail turning worthwhile and governments recalibrating commerce and taxes, the subsequent part of the cycle is taking form. Right here’s what’s shifting markets and what it means in your portfolio.
Uncle Sam’s Not AAA Any Extra
Moody’s simply pulled the US’s closing AAA ranking, citing ballooning debt, a $2T+ annual deficit, and political gridlock over taxes and spending. However for a lot of out there, this was already priced in. The 27-year period of fiscal stimulus led to 2023 and web curiosity funds have quietly climbed to 18% of tax revenues, far above historic norms. It’s clear that tariffs and paying for tax lower extensions are indicators {that a} new interval of austerity has arrived.
The irony? Moody’s is likely to be late to the occasion. In 2011, S&P downgraded the U.S. after Congress handed $2T in cuts. Bond yields fell. Now, Moody’s is flagging deficits tied to tax lower extensions that haven’t even handed whereas ignoring tariffs, which perform as a $2T consumption tax that truly helps income. Tariffs damage progress, however they assist the Treasury: a trade-off the market appears to grasp higher than the ranking companies. Investor Takeaway: The downgrade displays what markets already know: we’re in a brand new fiscal regime outlined by austerity by way of tariffs and caps, not stimulus. Regulate Treasury yields and monetary negotiations however don’t overreact to the downgrade itself. Historical past exhibits these calls typically lag the basics.
Britain’s Large Beat, Meet Large Breach
The UK kicked off 2025 with a bang: GDP rose 0.7% q/q in Q1, topping forecasts and main the G7. Sturdy shopper spending and industrial output did the heavy lifting, giving the federal government a story win. Whereas questions stay round contemporary tax will increase and commerce tensions, the expansion beat exhibits the UK economic system nonetheless has momentum. In different phrases, Britain’s economic system is successful the dash, however the marathon has obstacles forward (commerce coverage being a key one).
In the meantime, a really 2025 downside hit a British retail icon. Marks & Spencer (MKS.L) was sidelined by an enormous cyberattack that knocked out its web site and app for over three weeks. The ransomware-style assault left M&S unable to take on-line orders since late April, with some retailer cabinets even working low as methods went offline. The retailer confirmed hackers stole sure buyer knowledge (fortunately no cost data) and disruption has value it an estimated £30+ million in revenue up to now. M&S shares have tumbled about 14% because the Easter weekend when the cyber woes started. The corporate is working to get operations again to regular, however the incident is a blunt reminder that even century-old manufacturers want cutting-edge cyber defenses. Investor Takeaway: A powerful economic system doesn’t immunize firms from tech threats: buyers within the UK market should stability the encouraging massive image (sturdy GDP, bettering sentiment) with due diligence on company-specific vulnerabilities (like cybersecurity resilience). Regulate commerce coverage strikes too, as any post-truce tariff flare-up might rapidly flip Britain’s shock increase right into a bust.
Supply: Bloomberg, As of Might 18, 2025.
Desert Offers Gasoline AI Chip Rally
Walmart Lastly Cashes In On-line
Copper: Electrified, Scarce, and (Barely) Tariffed
Copper simply received hotter. Structurally, demand is being supercharged by the whole lot from EVs and photo voltaic panels to AI knowledge facilities (sure, servers want critical energy). China, which buys over half the world’s copper, has rolled out infrastructure-heavy stimulus for 2025, including extra gasoline to the fireplace. However provide? That’s the place it will get tight. Chile and Peru (which mine 40% of worldwide copper) are battling falling ore high quality, political disruptions, and water shortages – a mixture that’s slowing down manufacturing simply as demand ramps.
Then got here a curveball: the US is probably (not but imposed) implementing a 25% tariff on copper imports, spooking merchants and briefly flooding inventories, which despatched costs tumbling. A 90-day truce with China has helped stabilize sentiment, however the market’s nonetheless edgy. Investor Takeaway: For buyers, the setup stays complicated: structurally bullish, however tactically risky. UK-based publicity ranges from direct copper exposures like WisdomTree Copper, to diversified miners (ANTO.L, GLEN.L, RIO.L) and broader pure sources funds (BRWM). Every brings completely different sensitivities to copper value shifts and to the coverage dangers now baked into the commerce.
Supply: Bloomberg, knowledge as of Might 18, 2025.
This communication is for info and schooling functions solely and shouldn’t be taken as funding recommendation, a private advice, or a suggestion of, or solicitation to purchase or promote, any monetary devices. This materials has been ready with out taking into consideration any explicit recipient’s funding goals or monetary state of affairs and has not been ready in accordance with the authorized and regulatory necessities to advertise impartial analysis. Any references to previous or future efficiency of a monetary instrument, index or a packaged funding product should not, and shouldn’t be taken as, a dependable indicator of future outcomes. eToro makes no illustration and assumes no legal responsibility as to the accuracy or completeness of the content material of this publication.
