Latest news with #USAssets
South China Morning Post
6 days ago
- Business
- South China Morning Post
Aberdeen, BlackRock make case for US assets on tax cuts, earnings power
US assets will remain a key allocation for global money managers like Aberdeen Investments and BlackRock even as investors seek portfolio diversification by loading up on defensive sectors in Europe, China and Japan amid tariff and inflation challenges, strategists said. Tax incentives handed out by the US government could drive corporate earnings to another level, particularly among smaller companies. Tech companies have also stepped up hiring talent to overcome challenges from China in the global race for leadership in artificial intelligence, they added. The US House of Representatives passed the One Big Beautiful Bill on July 3, and it was headed to President Donald Trump for sign-off. The legislation provides substantial tax cuts and slashes several social safety-net programmes, helping the S&P 500 hit a record high this week. 'The profitability of listed companies in the [US] market is still good,' said Zhang Dongyue, Asia-Pacific head of multi-asset and investment solutions specialists at Aberdeen. 'Although the market has fluctuated greatly this year, some industries including consumer goods, medical care, energy, and recently technology have recovered.' 03:02 US House passes Trump's bill, sending it to White House for president to sign US House passes Trump's bill, sending it to White House for president to sign He also cautioned investors not to bet against the US dollar despite its recent weakness. The S&P 500 handed investors 6.8 per cent returns this year en route its record on July 3, according to Bloomberg data, while global stocks gained 10.2 per cent. This year, the US dollar has lost 10.6 per cent against its major peers, according to the DXY Index, as investors trimmed dollar-based assets. The S&P 500 rose 5.3 per cent during Trump's first presidential term.
Yahoo
6 days ago
- Business
- Yahoo
Decade-old Local Currency Push by BRICS Is Still A Pipe Dream
(Bloomberg) -- BRICS countries once again failed to make significant strides in the cross-border payments system for trade and investment they've been discussing for a decade. Foreign Buyers Swoop on Cape Town Homes, Pricing Out Locals Trump's Gilded Design Style May Be Gaudy. But Don't Call it 'Rococo.' Massachusetts to Follow NYC in Making Landlords Pay Broker Fees NYC Commutes Resume After Midtown Bus Terminal Crash Chaos What Gothenburg Got Out of Congestion Pricing In a statement released as they kicked off their meeting in Brazil Sunday, leaders committed to additional talks on the potential for greater trade integration of the 10-nation bloc. 'We task our ministers of finance and central bank governors, as appropriate, to continue the discussion on the BRICS Cross-Border Payments Initiative,' the statement reads. A survey prepared by the Brazilian central bank will be presented at the two-day Rio de Janeiro summit. Despite the group's aspirations, progress has been slow — and the tide of global trade is shifting so quickly that it may be impossible to catch up. It's a missed opportunity for BRICS as the dollar comes under continued pressure from President Donald Trump's erratic policies. The greenback had the worst start to a year since 1973 as Trump's trade war and attacks on the Federal Reserve's hesitancy to lower interest rates roiled markets, calling into question the longstanding outperformance of US assets and sending investors fleeing in search of alternatives. It's created a boon for emerging markets that traders expect to extend further. While all members are supportive of the idea of cross-border payments, first cited in the statement of the bloc's 2015 summit, the technical aspects of integration are complicated. Central bank systems in some countries are not yet ready, three people familiar with the discussions said. It will take time to adapt those, they said, adding that it's unlikely to happen anytime soon. Roadblocks Discussions involve payment mechanisms, types of currencies used, how to implement infrastructure and how to share costs. There are security concerns about the integrated systems, two people said, adding that the BRICS bloc's recent expansion has also caused delays. The fact that several of the bloc's currencies are non convertible, and existing sanctions on member states Iran and Russia further complicate discussions, one person said. Some countries may argue that the cost involved in setting up and maintaining a unified system would not be justified given what they already have in terms of bilateral trade, another added. All asked not to be identified sharing details of private conversations. China, for one, has taken advantage of the US disarray and launched a sweeping campaign to promote the yuan's global role. In a speech last month, Chinese central bank governor Pan Gongsheng outlined a vision in which the country's financial markets are more open and the yuan plays a central role in the world's capital flows. Beijing is exploring the launch of the country's first domestic currency futures, which could compete with similar hedging tools in offshore markets like Singapore and Chicago, and is expanding its own payment system, known as CIPS, to cover more foreign banks. Trump pushback BRICS leaders also reaffirmed their commitment to expand local currency financing, diversify funding sources and strengthen cooperation in trade to promote inclusive growth and sustainable development. A document obtained by Bloomberg that outlines the latest thinking by the bloc shows that discussions around a new investment platform dubbed NIP are similarly stalled. The platform is seen as potentially filling a gap in development finance, providing more flexibility and reducing the dependency on hard currency financing. But 'given the variety of approaches and proposals raised, and the complex nature of the issues involved, further technical dialogue will be essential to advance a common understanding of the Platform's potential added value and operational framework,' it reads. Trump has threatened to slap 100% levies on BRICS if they ditch the dollar in bilateral trade. The pushback, in turn, has spurred interest in developing local payment systems and other instruments that can facilitate commerce and investment between the nations. The idea of abandoning the dollar and setting up a common currency for the bloc isn't under discussion, several officials have said. The US leader's response has not delayed BRICS conversations for the integrated systems, three people said. 'One of the ways to bring countries closer together is to reduce financing costs for trade operations. And one of the ways is to use more local currencies,' Tatiana Rosito, secretary for international relations at Brazil's Finance Ministry, said in an interview. 'Banks say that, depending on the period in which you carry out the operation, they may need to use the rate converting renminbi to dollars. But the goal in the end is you one day don't have it.' If there's a liquid market, 'you will have a direct exchange rate real-renminbi, real-rupee, real-rand,' she said. 'But this will depend on whether you have a critical mass and a volume of trade investments.' High rates The BRICS statement also references the added challenge presented by 'fluctuations in financial and monetary policies in some advanced economies' for countries already grappling with high debt levels. 'High interest rates and tighter financing conditions worsen debt vulnerabilities in many countries,' it reads. The bloc is also in discussions to establish a multilateral guarantees initiative which would focus on improving 'creditworthiness in the BRICS and the Global South.' The initiative, dubbed BMG, will be incubated within the NDB and start without additional capital contributions, according to the statement. --With assistance from Alan Crawford. For Brazil's Criminals, Coffee Beans Are the Target SNAP Cuts in Big Tax Bill Will Hit a Lot of Trump Voters Too Sperm Freezing Is a New Hot Market for Startups Pistachios Are Everywhere Right Now, Not Just in Dubai Chocolate China's Homegrown Jewelry Superstar ©2025 Bloomberg L.P.
Yahoo
01-07-2025
- Business
- Yahoo
Biggest Stock Winners and Losers in First Half of Year
Six months into the year, world conflicts and Donald Trump's turbulent policy making have shattered assumptions about the strength and preeminence of US assets and the economy leaving market favorites in tatters and conjuring unexpected winners. Bloomberg's Emily Graffeo looks at the biggest winners and losers in the S&P 500 Index over the first half of the year on "Bloomberg Open Interest." Sign in to access your portfolio
Yahoo
30-06-2025
- Business
- Yahoo
What Traders Have Gotten Wrong in 2025
(Bloomberg) -- Six months since Wall Street laid out its predictions for 2025, world conflicts and President Donald Trump's turbulent policy making have shattered assumptions about the strength and preeminence of US assets and the economy — leaving market favorites in tatters and conjuring unexpected winners. Philadelphia Transit System Votes to Cut Service by 45%, Hike Fares Squeezed by Crowds, the Roads of Central Park Are Being Reimagined Sao Paulo Pushes Out Favela Residents, Drug Users to Revive Its City Center Sprawl Is Still Not the Answer Mapping the Architectural History of New York's Chinatown As foreseen: swings in sovereign bond markets have been sharp, the Japanese yen rallied, and a comeback for emerging markets is finally materializing. At the same time, few envisaged the dollar — the emblem of US exceptionalism — would suffer losses this deep, or predicted the S&P 500's giddying plunge followed by breakneck rebound. Europe's stock market, meanwhile, has morphed from backwater into investor must-have. A 'very significant evolution' has occurred in markets in the past six months, said Simon Dangoor, head of fixed income macro strategies at Goldman Sachs Asset Management. 'Any themes that you were playing for at the start of the year that were about medium-term trends have been tested.' Here's a look into a group of assets and how they performed so far this year: US dollar Trump's low-tax, high-tariff policies were expected to stoke inflation and reduce the chances of interest-rate cuts from the Federal Reserve — factors seen propelling the dollar's supremacy well into 2025. Instead, a Bloomberg gauge of the currency posted its worst start to a year since at least 2005, and its hegemony is being debated ever more fiercely. The 'Liberation Day' tariffs at the start of April were so sweeping and punitive that they fueled fears of a US recession and fanned speculation Trump was seeking to buoy domestic manufacturing by engineering a weaker dollar. That's a dangerous game: the US depends on foreign investors to buy its mountainous debt pile, and a weaker greenback erodes returns on those bonds. Societe Generale SA, Morgan Stanley and JPMorgan Chase & Co. hadn't expected a turn in the dollar's fortunes in the first half and only predicted gradual slippage later in the year. Now, a JPMorgan team led by Meera Chandan says the greenback's faltering link to rates and equities could be a sign of structural weaknesses. They predict a gauge of the US currency's strength will drop another 2% by year-end. US stocks Investors entered the year with a record high allocation to US stocks, emboldened by a robust economy and bets around artificial intelligence. That optimism was all but abandoned within months, first as Chinese startup DeepSeek challenged the US's dominance in the AI race, and later on fears that Trump's tariffs would tip the economy into a recession. Nearly $7 trillion of market capitalization was wiped from the technology-heavy Nasdaq 100 Index between a February peak and an April low. A Bank of America Corp. fund manager survey showed the biggest-ever drop in exposure to US stocks in March. By early April, US equity bulls were in short supply. But Trump's decision later that month to pause some of the highest tariffs in a century proved pivotal. The S&P 500 hit a record high as data show the economy chugging along and with technology heavyweights in vogue again. After months of ructions and tempered forecasts, Wall Street strategists are taking an optimistic tone on US stocks for the second half. 'I am as bullish on US stocks as ever,' said Marija Veitmane, a senior multi-asset strategist at State Street Global Markets. 'They still offer the best earnings story with the fastest growth and most predictability. Institutional investors restarted buying in mid-April and have not looked back since.' Asian currencies With the Bank of Japan prepared to raise interest rates at a time when peers were cutting, traders started 2025 confident they'd see a rally in the yen. JPMorgan Asset Management and Brandywine Global Investment Management were among those proved right by the currency's almost 9% surge against the dollar to around 145 this year. The yen got a further boost in April from surging demand for haven assets amid the confusion around Trump's tariffs. Jupiter Asset Management's Mark Nash, who positioned for the rally in January, forecasts the currency will climb to 120 per dollar by year-end, an advance of around 17% from current levels. Read More: Goldman's Chambers Sees Currency Hedges Accelerate Dollar's Fall Bond Traders Boost Bets US 10-Year Yield Will Dive Toward 4% JPMorgan U-Turns on Stock Market, Now Sees Slight Gain for 2025 Goldman and Citi See Europe's Economy Powering Stock Rally Morgan Stanley, Goldman See Resilient Economy Supporting Stocks In China, meanwhile, US trade tariffs were expected to hurt the yuan, but so far the dollar's own sharp selloff has upended the prediction. In December, Nomura called for the yuan to weaken to 7.6 per dollar in offshore trading by May, and JPMorgan saw a rate of 7.5 in the second quarter. Instead, the yuan has surged 1.8% this year, hitting 7.1565 per dollar on Thursday — the highest level in seven months — as the People's Bank of China strengthened the daily reference rate. Still, strategists say the yuan will eventually have to fall, given strains in the Chinese economy that may require monetary and fiscal easing in the second half of the year to lift growth. 'China will want to utilize the yuan as a release valve, as well as to maintain competitiveness given the ongoing pressure on the economy and the fact that exports remain the main engine of growth," Barclays Bank Plc strategists Mitul Kotecha and Lemon Zhang wrote in a June 24 note. They see the yuan weakening to 7.20 per dollar by the end of the year, and to 7.25 by March 2026. Global bonds Amid the turbulence, many investors were grateful for one trade that 'saved their bacon,' according to Jared Noering, global head of fixed income trading at NatWest Markets. Short-dated government bonds were expected to perform well, boosted by central bank interest-rate cuts as inflation eased further. In contrast, long-dated bonds were predicted to come under pressure as governments took on increasing levels of debt to plug deepening fiscal deficits and ramped up public spending. Wagers structured around this divergence have largely played out around the globe, including in the US where markets remain on edge over the administration's tax and spending plans. Measures of so-called term premium in longer-dated US Treasuries have soared in an indication buyers are demanding higher compensation for rampant borrowing. Pimco and Allspring Global Investments correctly predicted the divergence in short- and longer-term yields in global bond markets. BlackRock Investment Institute was also correct to underweight long-term Treasuries. European stocks It was hard to find fans of European equities at the start of the year, let alone investors betting they would outshine their US peers. Six months on, fears about a sluggish economy and the threat of tariffs have been offset by Germany's plans to unleash hundreds of billions of euros in defense spending after Trump demanded Europe foots its own military bill instead of relying on the martial heft of the US. As of June 27, the benchmark Stoxx 600 index had trounced the S&P 500 by 16 percentage points in dollar terms, the best relative performance since 2006. The euro has surged to $1.17, bucking widespread forecasts for parity with the dollar in early 2025. Beata Manthey, Citigroup Inc.'s head of European and global equity strategy, was among the rare voices to back European stocks late last year. Targets at JPMorgan and Goldman Sachs proved too cautious. Goldman's chief global equity strategist, Peter Oppenheimer, says much has changed: 'Very aggressive tariffs are not likely to be fully implemented.' Emerging-market comeback Every year since 2017, emerging-market equities lagged US stocks. In 2025, a procession of money managers — with Morgan Stanley among the most vocal — were convinced it was going to be different. And so far the jinx appears to have been broken. A boom in artificial intelligence companies from Taiwan, South Korea and China has helped the equity index. But the overall investment case for emerging markets is underpinned by broad currency strength against the greenback and the perception that the period of US exceptionalism is waning. Emerging markets have added $1.8 trillion to shareholder wealth in 2025, reaching record market capitalization of $29 trillion. Bernd Berg, a strategist at InTouch Capital Markets, expects those inflows to continue thanks to benign inflation and decent growth rates. 'The geopolitical tensions have not derailed this rally,' Berg said. In individual developing markets, Turkey's lira took a hit in March — tumbling to a record low in the space of half an hour — after President President Recep Tayyip Erdogan detained his main political rival. That spooked investors who'd borrowed funds in countries where interest rates were low and plowed the cash into high-yielding lira-denominated assets. They feared the political shock could eventually herald changes in the country's market-friendly economic policy and high central-bank interest rates. While the broader fears haven't materialized, investors are wary, with Pimco among those trimming exposure to Turkish bonds. Meanwhile, the failure of Trump's push for peace between Russia and Ukraine has seen the price of Ukrainian bonds slump. Once a favorite investor bet on a ceasefire, Ukrainian warrants, which have interest payments linked to economic growth, have tumbled since the government defaulted on a payment. --With assistance from Carter Johnson, Selcuk Gokoluk, Andras Gergely, Alice Atkins, Naomi Tajitsu, Michael Msika, Srinivasan Sivabalan and Kevin Simauchi. 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Bloomberg
30-06-2025
- Business
- Bloomberg
Rollercoaster First Half Is Ending With Stocks at Records
Six months into the year, world conflicts and Donald Trump's turbulent policy making have shattered assumptions about the strength and preeminence of US assets and the economy — leaving market favorites in tatters and conjuring unexpected winners. In January, few envisaged the dollar — the emblem of US exceptionalism — would suffer losses this deep, or predicted the S&P 500's giddying plunge followed by breakneck rebound. Europe's stock market, meanwhile, has morphed from backwater into investor must-have.
