ASX 200 Live Updates for Tuesday, 20th May

Live ASX Coverage – Tuesday, May 20

Welcome to our live coverage of the ASX for today. This new format allows us to provide you with the latest updates in real-time. Remember to refresh for the most current information and feel free to share your feedback on how we can improve this experience.

Market Sentiment Shifts

8:55 AM
Recent market fluctuations, especially the sell-off prompted by Trump’s "Liberation Day," have pushed several sentiment metrics to bearish extremes. However, as the S&P 500 recovers towards breakeven for the year, this previously advantageous trend appears to be waning.

• Deutsche Bank reports a significant increase in equity positioning, now tipping into a slight underweight stance. Discretionary investors are leading the way, becoming overweight for the first time since late March, in line with ongoing earnings and GDP growth.
• JPMorgan highlights a rebound in positioning from -1z to a closer-to-neutral -0.2z (39th percentile since 2015). However, retail buying has slowed down, and macro hedge funds have largely completed their short covering. Foreign investment interest remains tepid.
• Goldman Sachs observed that despite robust retail investor activity earlier this year, there was a small net selling last week. Nonetheless, US equities enjoyed substantial net buying, primarily driven by short covering and limited long purchases.

Top Headlines

1. Are US Assets Becoming Less Attractive?
   Globalisation’s decline is leading to modern mercantilism, with governments attempting to enhance national wealth and self-sufficiency. This shift threatens to alter global economic dynamics and challenge the dominance of the US dollar. A startling 10% decline in the dollar since Inauguration Day adds to the uncertainty, with US equity markets wrestling with volatility and competition from firms like China’s DeepSeek.

2. Insights from the ASX Investor Day
   The Brisbane ASX Investor Day featured notable experts such as Gemma Dale, who compared the erratic economy to an F1 race. Fund managers from firms like Antipodes, Munro, and Plato discussed strategies to navigate market uncertainty and identified promising investment avenues.

3. The Role of US Treasuries
   Once viewed as the ultimate safe haven, US Treasuries are facing scrutiny due to political instability and growing deficits. April’s bond market turmoil raised yields to nearly 5%. Despite these challenges, Treasuries remain a crucial portfolio element, providing high liquidity and credit quality, as well as attractive yields above 4%, particularly in intermediate bonds.

Stock Market Drivers

8:40 AM
Most major US indices closed higher overnight, overcoming early declines. The S&P 500 recorded its sixth consecutive daily gain, despite dropping by as much as 1.05% at the start. Factors influencing this recovery include:

• The downgrades of the US credit rating by S&P and Fitch to AA+ in 2011 and 2023 respectively, while Moody’s downgrading results in a unanimous AA+ rating.
• Goldman Sachs reported that the last week saw the largest net buying of US equities since December 2021, largely driven by short covering, which could continue to boost short-term gains.
• Bank of America indicated that the US credit downgrade shouldn’t lead to forced selling but may dampen Treasury sentiment.

Morning Update

8:35 AM
S&P/ASX 200 futures show an increase of 73 points (+0.87%), suggesting the market will recover fully from yesterday’s decline of 0.58%.

For those who are new, you can catch up quickly by reading today’s Morning Wrap.

Stay tuned for more updates throughout the day.