Analyst Weekly, Could 19, 2025
World markets are flashing alerts that matter for the street forward, and savvy buyers are paying consideration. From AI growth into new areas to retail turning worthwhile and governments recalibrating commerce and taxes, the subsequent section of the cycle is taking form. Right here’s what’s transferring markets and what it means in your portfolio.
Uncle Sam’s Not AAA Any Extra
Moody’s simply pulled the US’s last AAA ranking, citing ballooning debt, a $2T+ annual deficit, and political gridlock over taxes and spending. However for a lot of available in the market, this was already priced in. The 27-year period of fiscal stimulus led to 2023 and internet 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 could 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 operate as a $2T consumption tax that truly helps income. Tariffs damage development, 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 through tariffs and caps, not stimulus. Control Treasury yields and financial 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. Robust 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 financial system nonetheless has momentum. In different phrases, Britain’s financial system is successful the dash, however the marathon has obstacles forward (commerce coverage being a key one).
In the meantime, a really 2025 drawback 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 operating low as programs went offline. The retailer confirmed hackers stole sure buyer knowledge (fortunately no cost data) and disruption has price it an estimated £30+ million in revenue up to now. M&S shares have tumbled about 14% for the reason that 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 robust financial system doesn’t immunize corporations from tech threats: buyers within the UK market should steadiness the encouraging huge image (sturdy GDP, bettering sentiment) with due diligence on company-specific vulnerabilities (like cybersecurity resilience). Control commerce coverage strikes too, as any post-truce tariff flare-up might shortly flip Britain’s shock growth right into a bust.
Supply: Bloomberg, As of Could 18, 2025.
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Copper: Electrified, Scarce, and (Barely) Tariffed
Copper simply obtained hotter. Structurally, demand is being supercharged by every thing 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 world 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 quickly 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 advanced: structurally bullish, however tactically unstable. UK-based publicity ranges from direct copper exposures like WisdomTree Copper, to diversified miners (ANTO.L, GLEN.L, RIO.L) and broader pure assets 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 Could 18, 2025.
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