Times will suit active managers says T. Rowe Price | Australian Markets

Investors are being predicted to look past US equities and mega-cap tech stocks over the subsequent six months, in response to the 2025 mid-year Investment Outlook from international investment management firm, T. Rowe Price.

And it’s an atmosphere that the company believes will suit active managers with the observe that Australia shouldn’t be proof against international trade uncertainty however is comparatively defensively positioned within the close to time period.

The company’s outlook for international financial markets for the rest of 2025 is one which displays the impacts of occasions being pushed out of the US.

The T. Rowe Price narrative is that underpinning the outlook for the subsequent six months is “an accelerated trend towards deglobalisation, a tariff-driven reconfiguration of global trade, an expected broadening of stock market opportunities globally beyond US equities and mega-cap stocks, and a bond market regime change driven by trade policy changes and German fiscal expansion”.

According to T. Rowe Price the ey takeaways from the 2025 Midyear Market Outlook embody:

• Economics: The international financial system is underneath strain from a number of instructions. Trade conflict fallout may gradual the worldwide financial system. U.S. fiscal and tax coverage will seemingly take center stage within the second half of the yr. Expect rising prices for companies and a discount in client buying energy.
• Equities: The broadening of equity markets ought to proceed, decreasing the U.S./mega-cap market focus of latest years in favor of worth stocks and choose rising markets.
• Fixed income: The elementary shift within the international fixed income panorama is manifested in above-target inflation in some developed markets, particularly the U.S. Corporate bonds are seemingly getting into an financial downturn with traditionally high credit high quality, positioning them more defensively than prior to now.
• Multi-asset: Inflation safety and equity diversification will obtain renewed emphasis in T. Rowe Price multi-asset portfolios. Inflation protected bonds and actual belongings can present efficient hedges towards anticipated inflation. More enticing valuations signal favoring worldwide and worth equities in figuring out multi-asset portfolio allocations.

The evaluation stated that whereas there would proceed to be a place for each active and passive management in traders’ portfolios, the difficult market atmosphere, together with larger rates of interest, more risky markets, and better coverage uncertainty, helps the situations for active managers to outperform.

1. Rowe Price sector portfolio supervisor coping with Australian equities, Tom Shelmerdine stated that whereas Australia is by no means proof against international trade uncertainty, the firm noticed it as being comparatively defensively positioned within the close to time period.

“Australia has low direct exposure to U.S. tariff policy; rather, it is wholly dependent on China through commodity exports and therefore could benefit from any countercyclical domestic stimulus response from China. Furthermore, the Australian domestic economy is proving resilient with a ‘Goldilocks’ backdrop of ongoing fiscal spending and a supportive monetary easing cycle,” he stated.

“This all suggests tailwinds for Australian stocks, which are back to all-time highs. However, the longer-term challenge for Australia remains the structural downturn in commodity export revenues (iron ore, liquefied natural gas, coal) and associated fiscal pressures, which would lead to pressure on the Australian dollar. For now, however, the backdrop looks supportive.”