Market Update - US equity investors get fiscal policy clarity, while awaiting results from tariff agreements

Highlights: On 3 July 2025, Congress passed the landmark One Big Beautiful Bill Act (H.R.1), a sweeping reconciliation package that brings significant tax changes, new border security funding, major spending cuts, and broad policy shifts across energy, healthcare and more. This historic legislation reflects the current administration’s policy priorities and is already reshaping expectations for households, businesses, and markets.

• Some key takeaways of the bill are inclusions for major tax cuts, a focus on domestic energy production with big incentives for oil, gas and mining, while scaling back support for wind, solar and electric vehicles. It also delivers record funding for border security, adding budget for more wall construction, enforcement officers and detention capacity
• On the flip side, the bill tightens work requirements for Medicaid and Supplemental Nutrition Assistance Program (SNAP), which could mean millions can lose access to health or food benefits in the years ahead
• The law also raises the federal debt ceiling by USD5 trillion, adding to long-term debt concerns
• We maintain our overweight US equity positioning. Despite cyclical slowing, earnings remain strong. However, the US government’s policy shifts remain a source of volatility as trade negotiations are ongoing. Tariffs are the first leg of President Trump's "three-legged" policy agenda. The second leg, which has now been concluded, includes extending the debt ceiling, cutting personal and corporate taxes, and providing fiscal stimulus. The third leg focuses on deregulation, targeting the Financial, Health Care, Technology, and Energy sectors, which could be another positive for stocks. Regardless, implementation risks remain