What the First Half of 2025 Taught Us – Kar Yong Ang, Financial Market Analyst at Octa Broker, on 5 Emerging Global Trends

Kar Yong Ang, Octa Broker’s financial market analyst, has spent the past six months tracking and interpreting these developments from both a macro and micro perspective. The expert shares five key emerging trends that lead to behavioural shifts in capital flows, policymaking, and risk appetite. From geopolitical catalysts to sectoral rotations and emerging asset class maturity, the dynamics unfolding now are likely to set the tone for the remainder of the year.

Trend #1. Trump Turbulence: Trade Protectionism Resurfaces

At the start of 2025, markets were caught off guard by a rapid escalation in US-led protectionism. What began with sweeping tariffs on Chinese semiconductors and EV batteries—reaching as high as 82%—soon extended to other key partners, including the EU, Mexico, and South Korea. Several European steel and aluminium products, Indian pharmaceuticals, and even Canadian timber were slapped with new duties. In response, trading partners began retaliating: China halted purchases of US farm goods like soybeans, while European officials discussed countermeasures on digital services and aircraft parts. The S&P 500 fell 3.2% in a single session, while Hong Kong’s Hang Seng Index plunged nearly 10% over the week.

But the shift is broader than just trade. With Donald Trump now back in the White House, his renewed criticism of the Federal Reserve (Fed), aggressive push for fossil fuel production, and a potentially inflationary tax bill have reignited uncertainty across asset classes. This has pushed investors towards traditional safe havens: gold surged to new highs, Bitcoin regained its ‘digital gold’ narrative, and the dollar softened across several FX pairs amid rising concerns about long-term US debt sustainability.

Geopolitical risk has now become a daily input into market models. Portfolio managers with tech, manufacturing, and export-heavy exposure have already adjusted their strategies. The growing sense of ‘risk-off’—driven by fears of policy shocks, economic fragmentation, and stagflation—has started to weigh on global equities and boost defensive positioning.

‘This kind of uncertainty is toxic for short-term sentiment’, says Kar Yong Ang. ‘Whether you’re trading indices, FX, or crypto, you can feel the undercurrent of risk aversion creeping in. Gold and Bitcoin benefit in this climate—not because they’re immune, but because they’re perceived as alternative stores of value in a world with too many unknowns’.

Trend #2. Rising Recession Probability

Disinflation appears to be taking root. In April, the US Consumer Price Index (CPI) slowed to 2.3% year-on-year—a sharp drop from over 4% just months earlier. But beneath the surface, concerns are mounting that the global economy is heading toward a downturn.

Part of this pessimism stems directly from US trade policy. Tariffs on semiconductors, batteries, and other strategic imports are rippling through global supply chains—dampening trade, stalling investment, and pressuring already fragile growth projections. The International Monetary Fund (IMF) and OECD have both revised their 2025 global growth forecasts downward, citing heightened uncertainty tied to Washington’s escalating protectionism.

Central banks are responding. In May, the Bank of England (BoE) delivered its fourth consecutive rate cut, bringing the base rate to 4.25%. While expected, the vote split on the Monetary Policy Committee—ranging from no change to a full 50 bps cut—reflected deep divisions on how to balance inflation control with recession risk. The European Central Bank (ECB) followed suit, unanimously cutting its key deposit rate to 2.25% and citing ‘exceptional uncertainty’ as a rationale for a more dovish trajectory.

Still, rate cuts are not guaranteed. The full inflationary impact of US tariffs is not yet reflected in official CPI data. 8 July marks a key deadline when another wave of levies could take effect. At the same time, one-year US consumer inflation expectations have surged to multi-year highs. If realised, this would severely constrain the Fed’s room to ease further.

Meanwhile, the Federal Reserve has held its policy rate steady between 4.25%–4.50%, signalling caution amid a murky macro outlook. Chair Jerome Powell noted that ‘the uncertainty of the outlook has increased further’, particularly due to the trade-policy overhang and rising inflation risk. As of early June, futures markets still price in a possible rate cut in Q3—but expectations are fragile.

Bond markets are already pricing in slower growth. Yields on 10-year US Treasuries have dropped from 4.65% to 4.12% since March, while the Bloomberg Global Aggregate Bond Index climbed 3.8% in Q1. European and UK government bonds have also rallied. Meanwhile, the euro and sterling have both softened as markets bet on extended easing cycles from the ECB and BoE.

‘A recession may not be imminent, but the rising probability of one is enough to change positioning’, notes Kar. ‘In our portfolio, we’ve increased allocation to investment-grade debt, especially in Asia-Pacific markets, where the risk-reward profile looks increasingly attractive in this environment’. He also adds that from this growing caution emerges a broader trend: investors are beginning to rotate from growth stocks to value and defensives.

Trend #3. Emerging Rotation from Growth to Value and Defensive Sectors

As macro uncertainty rises, investors are recalibrating—and the market’s appetite has clearly shifted. According to BlackRock, U.S. value stocks have delivered a 2% year-to-date gain, even as US growth stocks declined by 10%. This contrast highlights a clear shift toward more defensive equities in 2025. Meanwhile, non-US equities have outperformed US stocks by approximately 10% through late May, driven by strong rallies in Europe and Japan, further reinforcing this rotation away from US growth flare-ups.

This trend is visible in specific sectors, too. European utility players, for example, have attracted inflows after demonstrating consistent earnings—even when growth counterparts faltered. Across the board, the strategy has shifted toward fragment opportunity, with capital favouring companies with strong dividends, steady cash flows, and recession resilience.

‘What we’re seeing is not panic—it’s discipline’, highlights the financial analyst. ‘In my own allocation, I’ve trimmed exposure to speculative tech and redirected capital toward high-quality names in utilities, healthcare, and infrastructure. This isn’t about hiding—it’s about tilting the odds in your favour. This move toward value may persist if macro volatility remains elevated, especially with central banks walking a policy tightrope and global trade conditions far from settled’.

Trend #4. Crypto Matures, Led by Institutional Demand

December 2024 marked a watershed moment: Bitcoin officially broke above the $100,000 mark, a milestone largely explained by Donald Trump’s victory in the US presidential elections and the market’s perception that his administration will usher in a significantly more crypto-friendly regulatory environment. The rally has since broadened, with Ethereum expected to surge to between $6,500 and $8,700 by year-end 2025—more than doubling from early-year levels, driven by the long-awaited ETH 2.1 upgrade.

By May, the total crypto market capitalisation had surpassed $3.4 trillion, highlighting a structural shift in how digital assets are valued. Notably, stablecoin demand has surged in high-inflation economies like Argentina and Venezuela, where local currencies continue to lose purchasing power—further proving crypto’s appeal as a parallel financial system.

The difference this time isn’t just in price—it’s in infrastructure. Custody, compliance, and access have matured significantly, bringing crypto closer to traditional asset classes in terms of regulation, liquidity, and institutional strategy. From ETF-linked staking products to regulated custodial wallets, exposure to digital assets is becoming both safer and more sophisticated.

‘Bitcoin may no longer be just a speculative bet’, says Kar. ‘With traditional safe havens like the US dollar and Treasuries facing credibility questions, crypto—and Bitcoin in particular—is beginning to take on the role of an alternative safe haven, especially for investors in emerging markets and inflation-sensitive economies. With crypto infrastructure evolving and demand spreading across both developed and frontier markets, Bitcoin’s new price zone may be less of a top—and more of a base’.

Trend #5. AI Is Driving Long-Term Capital Flows

In 2025, capital is not just chasing yield—it’s pursuing transformation. A significant trend is the global reallocation of investment into artificial intelligence infrastructure. NVIDIA has announced plans to manufacture AI supercomputers entirely within the United States, commissioning over 1 million square feet of manufacturing space across Arizona and Texas.

In India, the Adani Group launched a $12 billion AI-solar logistics fund aimed at digitising transport and power infrastructure. However, the initiative has attracted regulatory scrutiny, with the U.S. Securities and Exchange Commission summoning Gautam Adani over alleged bribery and misleading U.S. investors.

‘AI infrastructure is no longer just a narrative—it’s now a capital cycle’, Kar Yong Ang adds. ‘We’re seeing a reallocation from overvalued tech into what I’d call mission-critical enablers—firms building the back-end of AI, not just marketing it. Rather than betting on broad thematic trends, many investors—myself included—have started targeting sector-specific ETFs with exposure to AI-enhanced logistics and semiconductor manufacturing. These are not tactical trades, but strategic long-term anchors in portfolios designed for structural shifts in technology’.

Conclusion: What Comes Next

The first half of 2025 has been shaped by volatility—from unexpected tariff escalations to central bank pivots and sectoral rotations. But beneath the market noise, structural realignments are taking place that require traders to stay focused and selective. As we head into the second half of the year, several signals stand out.

• Trade policy remains a critical variable. The upcoming 8 July deadline for the next round of U.S. tariffs may reignite inflationary pressure and delay rate cuts. Already, one-year consumer inflation expectations have surged to their highest level since 2022—a sign that markets may be underestimating the persistence of price pressures.
• Central banks are signalling a cautious shift. While the ECB and BoE have begun cutting rates, the Fed remains on hold. Markets expect cuts by Q3, but that path depends heavily on inflation data and geopolitical developments. Any surprises here could quickly ripple through bond yields, equity valuations, and currency markets.
• Bitcoin and Ethereum remain firmly in focus. Institutional flows into spot ETFs are now a core driver of crypto performance, while the global crypto market capitalisation, recently exceeding $3.4 trillion, reflects growing investor confidence in blockchain-based assets. These developments point to crypto’s evolution from a speculative asset to a financial infrastructure.
• Sector leadership is also shifting. Value and defensive sectors may soon begin to outperform growth as traders seek earnings stability and resilient balance sheets. In this environment, equities with strong free cash flow—particularly in utilities, healthcare, and infrastructure—are increasingly favoured.
• Meanwhile, capital formation is accelerating in AI, semiconductors, and supply-chain technologies. These aren’t short-term themes—they represent the early scaffolding of the next economic cycle. For traders and investors alike, following where capital is being deployed may be more important than following headlines.

Staying ahead in this market isn’t about speed—it’s about alignment. Those who anchor their strategy in clear macro signals and shifting structural trends will be better positioned to navigate what’s next. Here’s a checklist for traders in H2 2025 to facilitate market navigation.

• Watch the 8 July tariff deadline. Its outcome may reshape CPI forecasts and influence Fed rate decisions.
• Track central bank policy. ECB and BoE cuts are underway, but the Fed remains data-dependent.
• Monitor ETF flows and crypto momentum. BTC and ETH are now part of broader portfolio strategies.
• Look for relative strength in value sectors. Utilities, consumer staples, and dividend leaders are gaining traction.
• Follow capital flows into AI and infrastructure. These sectors are driving the next investment cycle.

Disclaimer: This article does not contain or constitute investment advice or recommendations and does not consider your investment objectives, financial situation, or needs. Any actions taken based on this content are at your sole discretion and risk, and we and Octa do not accept any liability for any resulting losses or consequences.

Kar Yong Ang is a Senior Market Analyst at Octa and a recognized financial educator with over a decade of experience in trading and market analysis. Today, Kar Yong is known for his deep expertise in technical analysis, macro trend forecasting, and the development of actionable trading strategies.