Henry Ren
6 min read
In This Article:
(Bloomberg) — Some of the world’s biggest money managers are wary of chasing the stock rally further in the second half of 2025, bracing for more volatility.
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Markets are wrapping up a wild six months that saw the S&P 500 plunge 19% from peak to trough, before it recouped those losses. The index closed at a record high on Friday after the ceasefire between Israel and Iran revived the risk-on rally.
The recent bounce is not enough for many institutional investors, who cite a litany of risks confronting equities. The fast-approaching deadline for tariff deals, a mixed outlook for earnings and questions around America’s debt and leadership of the Federal Reserve loomed large in interviews with investment firms. They’re also mindful of US-China tensions, potentially eased somewhat by the countries’ just-announced trade framework.
“We are more cautious than constructive,” said Joe Gilbert, a portfolio manager at Integrity Asset Management LLC. “The outlook for the second half of the year is always framed by the starting point, and that starting point from the perspective of valuation and earnings growth is not that attractive.”
Gilbert’s view is typical of the downbeat sentiment among institutional investors from Singapore to London and New York as June draws to a close. It’s also reflected in equity positioning by global asset managers, which remains well below historical levels.
Here’s more about five key risk factors that stock investors said they are watching closely for the rest of the year:
Tariff Deadline
An immediate threat to the equity rally lies in the July 9 deadline set by President Donald Trump to reach trade pacts with major US partners. The stakes are high as exporters without a deal will be hit with much higher tariffs than the current 10% level applied to most countries.
The UK is an outlier, having secured an agreement on paper. The European Union and the US believe they can clinch some form of trade agreement in time, Bloomberg News reported Friday, while talks with India, Japan and many others continue. Bloomberg News has also reported that the US is nearing agreements with Mexico and Vietnam.
Still, investors got a reminder of the risks of sudden turbulence in this area of international relations when Trump on Friday said he would terminate trade talks with Canada in response to a 3% digital services tax.
