Opportunities amid the uncertainty for investors who stay focused
This week US President Donald Trump has executed something of an about-face on tariffs on Chinese imports, and predictably the market extended its celebration.
This article was first published in The Australian on 16 May 2025.
The US-China tariff agreement announced on May 12, marked a significant de-escalation in trade tensions. Both nations agreed to a 90-day pause on tariff increases, reducing US tariffs on Chinese imports from 145 per cent to 30 per cent and Chinese tariffs on US goods from 125 per cent to 10 per cent.
In turn, Wall Street bounced: If you remember, a fortnight ago, I wrote the market rally “is not a sign of irrational exuberance but a reflection of investors pricing in a potential policy shift. Markets often rebound after sentiment shocks when uncertainty peaks and the worst-case scenario fades.”
Well, at the time of writing, the S&P 500 is less than 4 per cent from its all-time highs. But with gains come higher multiples, and now the S&P 500’s price-earnings ratio sits at 20.4 times one year forward earnings, which is higher than at any other time in the last 23 years, except for the Covid-19 period and earlier this year, right before the market corrected.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
