Markets recorded a strong week with equity indexes broadly higher, driven by resilient U.S. economic data and investor optimism about global growth, despite ongoing trade and inflation concerns. In this week’s update, we discuss recent economic data, equity and debt market positioning and highlight recent investment portfolio updates across our LICs.
Market Updates
The S&P/ASX 200 Accumulation Index ended the week up 1.6%, driven by the energy and technology sectors which were up 5.8% and 5.6% respectively. The S&P/ASX Small Ordinaries Accumulation Index ended the week down 0.5%.
The U.S. market had its second-best week of 2025, with large caps (S&P 500) up 5.3%, which is 19.8% above its post-Liberation Day low on 8 April. Similarly, U.S. small caps (Russell 2000) increased 4.5% and the MSCI World (AUD) was up 4.4%. U.S. President Donald Trump stated that the U.S. does not have time to negotiate individual trade deals with each country and therefore his administration will decide what tariff rates will be “over the next two to three weeks”, and that trade partners should expect letters informing them what “they’ll be paying to do business in the United States”. The country’s credit rating was downgraded by Moody’s from AAA to Aa1 to reflect high government debt and interest payment ratios relative to other similarly rated sovereigns. This leaves the U.S. government without a top credit rating among any of the major rating agencies.
The biggest commodity moves included lithium which was down 6.9% for the week and down 10.5% for the past three months, and gold, which fell 3.6% in the week though is still up 10.6% over the past three months.
A key event this week is the Reserve Bank of Australia’s Board meeting tomorrow (Tuesday) to set the cash rate, with markets pricing in a 25-50 basis points (0.25-0.50%) cut.
Stock Watch
Woodside Energy (ASX: WDS)
Last week, Australian petroleum exploration and production company, Woodside, announced a non-binding collaboration agreement with Saudi Aramco, the world’s largest oil and gas producer, to explore global opportunities. This includes Aramco’s potential acquisition of an equity interest in, as well as LNG offtake from, Woodside’s Louisiana LNG project. The agreement follows Woodside’s sale of a 40% stake in the project to Stonepeak in April. Markets responded positively to the Aramco deal, as a further sell-down would ease Woodside’s capital expenditure commitments and create a more attractive cash-flow profile for investors. With Woodside shares increasing 5.4% last week, we took the opportunity to trim our position.
Held in: WAM Leaders (ASX: WLE) and WAM Income Maximiser (ASX: WMX)
Life360 (ASX: 360)
Leading family location safety app, Life360, rose 25% following its Q125 update last Tuesday, exceeding consensus estimates across all key metrics, including earnings, which doubled expectations. The outlook remains strong, with FY2025 subscription revenue guidance revised upward. We believe the market continues to undervalue the resilience and growth momentum of Life360’s app subscription business. The advertising business, still in its infancy, has the capacity to match the size of the subscription business medium-term, implying potential for a doubling of revenue growth. Additionally, potential commission changes to the Apple App Store may provide future earnings upside.
Held in: WAM Capital (ASX: WAM), WAM Leaders, WAM Global (ASX: WGB) and WAM Active (ASX: WAA)
TransUnion (NYSE: TRU)
TransUnion is a leading credit bureau with strong market positions in the U.S., Canada, the U.K., and India. In the U.S., the company benefits from a consolidated industry structure, operating as one of the three major credit bureaus, a dynamic that supports attractive profit margins and returns. Recent discussions with TransUnion’s management support our view that it performed well in the first quarter and that guidance for the rest of the year is conservative. As we mentioned in last week’s article, we favour management teams that underpromise and overdeliver. We believe TransUnion consensus earnings can beat expectations, which would serve as a catalyst for the share price.
Held in: WAM Global
APM Group (Intermediate Capital Group)
APM Group is a global provider of health and human services including employment, disability, assessment, allied health and vocational rehabilitation services. APM were acquired by private equity firm Madison Dearborn Partners in a public-to-private transaction in November 2024, supported by a private debt syndicate which includes WAM Alternative Assets through our investment partner Intermediate Capital Group. APM is a market leader across key geographies and have a strong track record in an industry with high barriers to entry and regulatory complexity.
Held in: WAM Alternative Assets (ASX: WMA)
Mixed economic data and inflation outlook: Positioning for what’s next
April economic data for the U.S. points to higher inflation expectations, slightly higher import prices and moderate weakness in spending and goods production. The full impact of tariffs remains to be seen, but so far, lower oil prices appear to be holding down imported inflation and providing a shock absorber for consumer purchasing power. Interestingly, investors are responding to all of these developments in a mixed fashion, with equity investors seemingly upbeat, focusing on the hard data, rather than noisy, soft, or survey data.
We highlight that despite a moderate fall in spending in April, U.S. retail sales growth is still very strong in relative terms, and that world industrial production (IP) growth has plenty of room to catch up. History suggests that world IP can overshoot U.S. retail sales when the USD weakens, as it has in recent weeks. On the other hand, debt investors continue to express concerns about stagflation (a situation that involves a combination of low economic growth, high unemployment and rising inflation) and the sustainability of the U.S. government’s debt path, noting hawkish (focused on controlling inflation even if it means slowing economic growth) developments in economist, consumer and bond market inflation expectations, as well as Moody’s ratings downgrade. So far, equities are responding to the hard data pointing to robust economic performance more than the soft data pointing to slowdown and are also dismissing the bond market’s concerns. The fortunes of the USD seem caught between upbeat equity flows, and more volatile debt flows.
We think that commodity exposures can be very helpful in navigating this environment – benefitting from USD weakness, and above-trend world IP growth. We also think that it is important to maintain biases towards quality and pricing power within equities. Quality matters because soft and hard data are giving us mixed signals, and because higher bond yields reflect a tightening of financial conditions. Pricing power matters because leading inflation indicators are showing a re-acceleration.
As for government bonds, there is still scope for yields to rise in the short-term because of inflation and debt sustainability concerns. Even so, investment grade corporate bonds are offering considerably higher yields than government bonds, with their spreads continuing to offer appeal from an income perspective.
Index returns performance table
WAM Income Maximiser Webinar
Register below for our Investment Portfolio Update and Q&A webinar at 11:00am (Sydney time) on Thursday 22 May 2025, with Chairman and Chief Investment Officer Geoff Wilson AO, Lead Portfolio Manager Matthew Haupt and Portfolio Strategist Damien Boey. You can submit your questions ahead of time, when you register for the webinar here.
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Listed investment companies have been assisting investors to grow wealth and earn income for over 100 years. They offer investors access to actively managed, diversified portfolios and have historically delivered reliable, fully franked dividends that often exceed those of the broader Australian equity market, as well as capital growth over the medium-to-long term. Their closed-end structure, consistent income potential, and governance standards make them a compelling option for wealth creation—learn more about how LICs can strengthen your investment strategy, by reading the full article from Chairman and Chief Investment Officer Geoff Wilson AO here.
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