The Weekly | Markets hold steady amid trade talks and sector swings

This past week, markets recorded mixed performance across sectors and global indexes. In this update, we explore the implications of U.S./China trade developments, surprising bond market signals, and what they could mean for commodities and Australian equities.

Market Updates

The S&P/ASX 200 Accumulation Index ended the week flat. Sectors that increased included utilities and technology, up 2.6% and 2.2%, while healthcare and financials were down 3.2% and 1.1% respectively. The sell-off in banks was driven by results from Westpac (ASX: WBC) and ANZ (ASX: ANZ), that fell short of analysts’ expectations. The S&P/ASX Small Ordinaries Accumulation Index outperformed large caps this week, increasing 3.5%. Brent oil was up 4.3%, driving strong performance in energy stocks, albeit still down 12.9% over a three-month period.

U.S. large caps (S&P 500) ended the week down 0.4% while small caps (Russell 2000) were up 0.1% and the MSCI World Index (AUD) was up 0.25%. The S&P 500 Index started the week down, before markets were buoyed mid-week by the U.S. Federal Reserve holding the Fed funds target rate steady, in the range of 4.25% to 4.50% and by reports that U.S. and Chinese officials planned to meet for trade discussions. As of Sunday U.S. time, President Trump’s administration officials announced they had reached a trade agreement with China after two days of negotiations in Geneva. Washington also announced it helped secure a ceasefire between India and Pakistan although accusations of violations by both sides have since been reported.

This week, we will be monitoring the details of the U.S./China trade deal along with stimulus announcements from China and developments in the conflict between India and Pakistan.

Stock Watch

NextDC (ASX: NXT)

Last week, leading data centre operator NextDC, updated the market on its contract utilisation and forward order book, noting a significant increase in contracted capacity. The company highlighted that this was the first major artificial intelligence (AI) deployment contract win, helping to alleviate recent investor concerns around the potential AI opportunity in the sector. Recent commentaries from hyperscalers including Google (NASDAQ: GOOG), Meta (NASDAQ: META), and Microsoft (NASDAQ: MSFT), on capital investment intentions should also allay concerns of short term demand weakness. The timeline to achieve the full run-rate of revenue from the contract wins also implies a much faster deployment compared to traditional cloud workloads. With additional capacity planned for multiple sites, we continue to see opportunity for further material contract wins. ​​​​​

Held in: WAM Leaders (ASX: WLE) 

MAAS Group (ASX: MGH)

We conducted 58 meetings at last week’s Macquarie conference in Sydney, concluding that Australian companies are doing better than expected. Among the standouts was founder led and owned MAAS Group, of which founder Wes Maas owns 50%, that engages in construction materials and services and real estate. Heading into the company’s update, ~10% of its shares on issue, (excluding Wes Maas’ holding) were ‘short sold’, whereby holders were betting that the share price would go down. Pleasingly, the MAAS Group reaffirmed FY2025 guidance, beating expectations and ending the week up 11.4%. We anticipate further upside from improvements in net debt and structural tailwinds including the growing renewables and infrastructure pipeline (further supported by Labor’s recent federal election win) and interest rate cuts, which should boost MAAS Group’s construction and property book.

Held in: WAM Capital (ASX: WAM), WAM Research (ASX: WAX), WAM Active (ASX: WAA) and Wilson Asset Management Founders Fund

MarketAxess (NASDAQ: MKTX)

MarketAxess, a leading global electronic fixed income marketplace, reported solid first quarter 2025 earnings results last week including a daily record securities trading volume. The market environment remains favourable with healthy velocity on its electronic platform over the course of April and May due to increased credit volatility and rapid electronification across the industry, driving market share gains. The company is positioned to digitally transform the fixed income market, one of the world’s largest financial markets, from analog phone-based trading to a fully electronic marketplace. Looking ahead, we continue to be attracted to MarketAxess’s industry position given its continued product innovation, increased volume in credit markets as electronic market makers and quantitative trading firms expand into this space, and its customers’ continued focus on efficiencies.
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Held in: WAM Global (ASX: WGB)

Airport Development Group (Palisade Investment Partners)

Airport Development Group (ADG) owns and manages diverse infrastructure assets across the Northern Territory including airports, hotels, aviation and commercial buildings. These infrastructure assets, such as Darwin Airport, are sought-after by superannuation funds and institutional investors as they are characterised by long-term contracts, diverse revenue sources, stable cash flows and are seen to protect against inflation, while still maintaining upside potential. At Darwin Airport, passenger growth continues to be strong and ADG have recently launched new routes to Singapore, Bali, Kuala Lumpur, Canberra and the Gold Coast and added additional airlines to existing routes.

Held in: WAM Alternative Assets (ASX: WMA)

Something else exceptional?

In a recent instalment of The Weekly, we discussed the health of “U.S. exceptionalism”. As previously discussed, we have not been convinced about the view that the world is witnessing the end of U.S. exceptionalism, nor the U.S. dollar’s (USD’s) demise as the world’s reserve currency. We have argued that there are many levers that could be pulled by U.S. policy makers to bring bond yields and currency under control, and to support financial markets more generally. Further, U.S. corporates have been and will likely continue to be, key drivers of innovation and productivity growth, supporting the global economy.

While the U.S. is exceptional, there are exceptional things happening abroad too. We highlight something very unusual in global fixed income markets – that China can now borrow USD’s at a cheaper rate than the U.S. government, when historically, it has borrowed at a premium to the U.S. This is a very recent development in bond market pricing. However, it is worth noting that for years, foreign exchange investors have been positioning for the yuan (CNY) to appreciate against the USD, despite concerns about trade wars. What all of this means is that there is demand for CNY-denominated assets despite the present volatility and geopolitical uncertainties. Importantly, if there is demand for CNY-denominated assets, there is scope and funding for Chinese policy makers to stimulate their economy, without fearing the constraints of capital outflows.

From an investment perspective, more Chinese stimulus would be favourable for commodities. A strong China also supports the Australian economy, as highlighted by Reserve Bank of Australia (RBA) Governor Bullock.

Index returns performance table

WAM Income Maximiser (ASX: WMX) Webinar

Register below for our Investment Portfolio Update and Q&A webinar at 11:00am (Sydney time) on Thursday 22 May 2025. Chairman and Chief Investment Officer Geoff Wilson AO, Lead Portfolio Manager Matthew Haupt and Portfolio Strategist Damien Boey will provide the first update on the construction of the investment portfolio, discuss their market outlook for equities and corporate debt and answer your questions in an extended Q&A. You can submit your questions ahead of time, when you register for the webinar here.

Discussion Paper: ‘Critiquing the Proposed Taxation on Unrealised Gains in Superannuation’

Following the election, we continue to be contacted by many of you, our 130,000 shareholders, who are concerned about the taxing of unrealised gains in superannuation, the significant unintended consequences this illogical and unfair legislation will have on you, and the retirement security of Australians. We have written a discussion paper ‘Critiquing the Proposed Taxation on Unrealised Gains in Superannuation’ to assist the current debate.

The paper builds on our February 2024 submission to the Senate, where we opposed the Labor Government’s proposal to tax unrealised gains and the failure to index the $3 million balance threshold – a proposal that still requires Senate approval.

The issue continues to receive strong mainstream media coverage, and it is encouraging to see a growing number of people speak out against the proposal.

To stay informed with our regular updates and market insights from the team follow our LinkedIn, X and Facebook accounts.

You can also follow Wilson Asset Management Founder and Chairman Geoff Wilson AO on X and  LinkedIn.

If you have any feedback you would like to share or wish to speak to a member of the Wilson Asset Management team, please respond to this email or call Christopher Ball on 02 9247 6755. You can also email us at [email protected]​​​​​.

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^*All Australian S&P indexes in this table are accumulation indexes, meaning they account for both price changes and the reinvestment of dividends, providing a measure of total return.

^#MSCI World (MSCI Daily Total Return Net World) and MSCI World SMID (MSCI WORLD SMID CAP Net Return) are both in AUD and are total return indexes i.e. include share prices and dividends. S&P 500 Index and Russell 2000 Index are similarly total return indexes.

^{^}Corporate bond yields represent the return investors receive for holding debt securities issued by companies. These yields vary based on factors such as the issuer’s credit rating, economic conditions, and market interest rates, serving as a key benchmark for corporate borrowing costs.

^**Australian long-term government bond yields represent the interest rates on government debt securities with extended maturities, typically 10 years or more. These yields reflect investor expectations for inflation, economic growth, and monetary policy, serving as a key benchmark for long-term borrowing costs in the economy.

^##The RBA cash rate refers to the interest rate set by the Reserve Bank of Australia (RBA) for overnight loans between banks. It serves as a benchmark for borrowing costs across the economy, influencing interest rates on mortgages, savings accounts, and business loans.