19 May 2025 | Weekly Snapshot
Saward Dawson > Wealth Advisory Insights > Weekly Snapshot > 19 May 2025
Did you know?
Did you know that China’s manufacturing output is greater than the combined output of Japan, Germany, South Korea and the US?
If the world is going to reduce their reliance on China, it is going to take a long time and no doubt, some economic pain along the way.
Market Movements
The ASX was higher by 1.3% last week, with tech stocks (up 5.1%) leading the way. Defensive sectors were lower overall, including utilities (down 1.7%) and consumer staples (down 2.3%). Pro-Medicus (up 7.8%) and Whitehaven coal (up 6.1%) were among the strongest stocks on no apparent news flow.
In the USA, stocks were higher by 2.0% with tech stocks leading the way (up 3.1%). Healthcare was down 2% on the back of Trump commentary, which proposes to reduce the cost of pharmaceuticals. Nvidia (up 10.1%) and Tesla (up 9.9%) were among the strongest stocks on no news, whilst two of the larger pharmaceutical companies in CVS and Thermo Fisher led the market lower, down 3.5% and 4.8% respectively.
News on trade policies remained a key driver for markets this past week, with positive trade and tariff developments between the U.S. and China helping boost stock markets. The S&P 500 is back into positive territory in 2025, quite amazing considering we were down almost 15% only 5 weeks ago. Markets also gained comfort from the week’s hard-economic-data releases, which confirmed that the actual impact of tariff uncertainty has remained contained for now. Since trade negotiations will likely stretch over the course of months, investors should stay prepared for periodic market volatility.
Portfolio Movements
CBA: Q3 update, earnings up 6%, shares up 2% for the week.
- Commonwealth bank provided a Q3 trading update with Q3 cash profits of $2.60B, largely in line with the $2.59B expected and up 6% on the prior comparative quarter.
- Operating income was up 1% driven by lending volume growth and higher trading income. Operating expenses were also up 1% driven by increased investment in technology and frontline staff.
- CBA has grown to be 11% of the ASX 200 index and has an outsized impact on many market indicators. For example, the price-to-earnings multiple on the ASX200 index looks expensive at 18x. CBA alone trades on a multiple of 27x. If you take out CBA the ASX multiple drops to 15 times, which is far more appealling.
Tencent reports strong Q1, shares up 3% for the week.
- Tencent Holdings, China’s biggest tech company, reported a stronger than expected Q1 last week with Q1 net income of CNY61.33B ahead of the CNY59.55B expected. Q1 revenue CNY180.02B was also a head of expectations up 13% for the year and the fastest pace of growth in over three years.
- Tencent’s gaming business saw revenue lift 24% and the company has also begun monetising its WeChat social media platform which hosts over 1.4 billion monthly users.
- On the results the company commented “We believe the operating leverage from our existing high-quality revenue streams will help absorb the additional costs associated with these AI-related investments and contribute to healthy financial performance during this investment phase. We expect these strategic AI investments will create value for users and society and generate substantial incremental returns for us over the longer term.
Sony reports strong Q4, shares flat for the week.
- Japanese entertainment conglomerate Sony reported a better-than-expected Q4 with EPS of 32.63 yen, well ahead of the 25.48 yen expected. Although Q4 revenue was down 24%, missing expectations. They also announced a new buyback plan of up to 250 billion yen (US$1.71 billion).
- Sony’s gaming segment, which houses PlayStation, saw a 4% drop in sales and a 12.5% decline in operating income year on year in Q4. Although sales and operating income for that segment were up 10% and 43%, respectively, for the full fiscal year.
- They did warn that tariffs could impact FY 2025 operating income.
The Week Ahead
- Tuesday: RBA official cash rate announcement. Markets are expecting a rate cut from 4.1% to 3.85% at this meeting. Futures markets are also pricing in a 2-3 more rate cuts before Christmas. These market expectations seem justified, when you compare our inflation rate (2.4%) alongside interest rates (4.1%). Historically, interest rates would be deemed as ‘neutral’ when they are 1% above inflation. In isolation, this would justify rates at 3.4%.
- Wednesday: CPI data for the UK is expected to show the inflation rate at 2.6%.
- Thursday: Eurozone manufacturing and services readings are expected to show activity levels at broadly neutral levels (i.e. no growth or decline). The US will report initial jobless claims, expected to be at 232,000 jobs, which is basically flat on the April reading. US services and manufacturing readings are expected to show modest growth at 50.8 and 50.2 respectively. A reading above 50 means economic expansion.
Saward Dawson Wealth Advisors Pty Ltd, a Corporate Authorised Representative of Akambo Pty Ltd t/a Accountants Private Advice
The information presented in this publication is general information only, and is not intended to be financial product advice. It has not been prepared taking into account your investment objectives, financial situation or needs, and should not be used as the basis for making an investment decision. Before making any investment decision you need to consider (with your financial adviser) your particular investment needs, objectives and financial circumstances.
Some numerical figures in this publication have been subject to rounding adjustments. Akambo Pty Ltd (including any of its directors, officers or employees) will not accept liability for any loss or damage as a result of any reliance on this information. The market commentary reflect Akambo Pty Ltd’s views and beliefs at the time of preparation, which are subject to change without notice.
