Dow Jones, S&P 500, Nasdaq Composite, Dax, Cling Seng, Nifty 50: Shock winners redefine markets in H1

File image: The German share worth index DAX graph pictured on the inventory alternate in Frankfurt, Germany. The DAX index has emerged as one of many surprisingly finest performers after a very long time. This displays renewed optimism in Germany’s economic system, which is present process a reset.
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If you happen to’d gone into hibernation on January 1 and simply woken up, you would possibly assume the worldwide markets, particularly the US, had had a clean trip in H1 of 2025. For instance, the two.9 per cent, 4.51 per cent and 4 per cent returns for Dow Jones, S&P 500 and Nasdaq Composite masks among the wildest gyrations the indices have seen in a six-month interval.

Within the first week of April, S&P 500 and Nasdaq noticed their third worst two-day efficiency in 20 years on the traces of the volatility witnessed in the course of the international monetary disaster.

Amid these turbulences, some unlikely winners and losers throughout equities and currencies is the story of this yr’s H1.

US, Europe change locations

Whereas AI, Magnificent Seven and US exceptionalism had been the euphoric themes on the daybreak of the yr, in actuality the 20.7 per cent returns for Germany’s Dax index makes it one of many surprisingly finest performers after a very long time. This displays renewed optimism in Germany’s economic system, which is present process a reset. As a part of a €800-billion plan, the EU lifted the rule requiring member-nations to maintain funds deficits under 3 per cent of GDP.

Germany adopted swimsuit, with the Bundestag voting to reform the Schuldenbremse — a constitutional “debt brake” limiting the funds deficit to 0.35 per cent of GDP, enacted in 2009 after the worldwide monetary disaster. With this reform and plans to extend deficits and spend extra, German shares discovered favour like by no means earlier than. These actions have utterly boxed out tariff conflict associated considerations.

Even after this out-performance, the Dax nonetheless stays one of many least expensive main index at a PE of 18.2 occasions. So is the case with China’s Cling Seng, which is the very best performer YTD. It trades at a PE of 11.22 occasions. In impact, the most affordable main indices at the beginning of the yr — Ibovespa, Cling Seng, FTSE 100 and Dax — are the very best performers amongst international indices.

In the case of currencies, whereas the greenback stays the worldwide reserve forex, de-dollarisation appeared to realize traction. The greenback index (DXY) is down 10.2 per cent in H1 2025, its steepest six-month fall since June 1973, whereas the euro surprisingly had considered one of its finest six months. Different main currencies have additionally appreciated towards the greenback, in contrast to final yr when the greenback stood alone in power.

What lies forward

One of the vital exceptional options has been how a lot markets have rebounded from the lows. For instance, the Nasdaq Composite is up 32.78 per cent from the tariff conflict lows. India’s Nifty 50 is up by 16.1 per cent. However as in comparison with the beginning of the yr, the uncertainties are solely a lot larger whether or not it’s the tariff conflict, geopolitics, or slowdown within the US economic system put up the increase years following Covid.

So, hereon, rather a lot will rely upon how earnings development performs out. A number of the tariff conflict associated impacts can be first seen within the upcoming June quarter earnings.

The H2 of the yr will reveal two essential issues — whether or not markets had been too informal about tariff wars, and, extra importantly, whether or not the de-dollarisation course of is for actual or nonetheless a fantasy.

Printed on June 28, 2025