Picture the scene at the Palace of Versailles last Wednesday.
Donald Trump signs his peace deal with Iran, and within seconds he is gesturing at the cameras.
His verdict on the moment? “Oil down, stocks up.”
He hammered the same line on Truth Social flying home, talking up record highs and tumbling crude.
And the man has a point on the numbers, even if half of Washington thinks the deal itself is a stinker.
Crude is now sitting below US$80 a barrel, and US pump prices have dropped under US$4 a gallon.
The S&P 500 closed around 7,500 the day after the signing, with the Nasdaq jumping nearly 2% in a single session.
Meanwhile, back at the ranch…
Now flip your screen over to the home team.
The ASX 200 is doing its very best impression of a bloke dozing in a deckchair.
We are roughly halfway through the year and the index has managed something in the order of a 4% return.
Wall Street (SP500, blue line) is making fresh records while our market shuffles sideways and checks its watch (XJO, yellow line):
Source: TradingView
[Click to open in a new window]
Part of the gap is simple.
We do not have the engines that are powering the US rally.
There is still no OpenAI listed on the ASX, and no Anthropic either.
The biggest growth stories of this decade are not ours to own at home, so our index lacks that turbo boost.
Why a boring market might be your friend
If you are an Aussie investor watching Wall Street sprint off into the distance, this stings a little.
Nobody enjoys cheering from the slow lane.
But there is a flip side worth sitting with.
A market that has not run hard does not have as far to fall.
The froth is building elsewhere right now.
The bond market gets a little twitchy on any given week, and there is growing chatter about private credit potentially unwinding.
If either of those wobbles turns into something bigger, the markets that ran the hardest tend to give the most back.
Our sleepy 4% suddenly starts to look like ballast rather than a curse.
Where the real opportunity sits
This is the same drum I keep banging.
Do not fall in love with Australia as a market, fall in love with clever Australian companies doing business well beyond our shores.
The index might be napping, but plenty of small caps and miners are wide awake.
Especially the ones with assets sitting in far more interesting postcodes than ours.
So let Trump take his victory lap at Versailles.
Oil down, stocks up, ASX sideways.
Sometimes the most useful thing your home market can do is stay calm while everyone else gets excited.
And if there is a nasty crash, hopefully we don’t get too stung on the way down.
Regards,
Lachlann Tierney,
Australian Small-Cap Investigator and Fat Tail Microcaps
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