Issue #28 | Pipe Dreams & Trade Wars

ASX - Top 3 Winners & Losers
Deals Down Under - QIC's $1bn Pipeline Exit
Global Markets - Trump Tariffs 2.0
Other News - Aussie Politics, Sport and Culture

The S&P/ASX 200 finished the week down 0.3%, dropping 0.8% on Friday alone as renewed Middle East tensions pushed oil back above $US100 a barrel and Wall Street's growing unease over AI spending spilled into Australia’s own tech sector. Seven of the ASX's 11 sectors ended in the red, with tech and resources among the hardest hit as gold slipped and rate expectations firmed on the back of higher energy prices. Energy stocks were the one bright spot, rising with the oil price and cushioning the broader market from steeper losses. 

This week’s best performers

Generation Development Group (ASX:GDG) +21.91%

The wealth platform's shares jumped after it reported group funds under management of $46.4 billion for FY26, up 36% on the prior year, with record quarterly inflows at its Generation Life arm. The update also confirmed GDG has finished folding in its Evidentia and Lonsec managed account acquisitions, plus landed a strategic partnership with Colonial First State on retirement products. It's a strong operational update, but worth noting the stock is still down 22% over the past 12 months, so this week's rally is just a bounce instead of a full recovery.

Karoon Energy (ASX:KAR) +19.33%

The oil and gas producer surged after completing a major overhaul of its Baúna FPSO in Brazil, lifting uptime to 97% and restoring output to around 22,000 barrels of oil per day. June quarter production came in at 1.08 million barrels of oil equivalent, with sales revenue of US$116.4 million. Karoon also has an expanded buyback of up to 71 million shares running to July 2027, a signal that management sees the stock as undervalued and backs its own trajectory from here.

South32 (ASX:S32) +15.13%

The diversified miner rode a broader wave of commodity strength this week, with base metals prices firming across the board. South32's spread across aluminium, alumina, manganese and copper means it benefits when multiple commodity markets move together, rather than depending on a single price cycle. Copper was the standout, supported by tighter supply expectations and demand tied to electrification and grid buildout.

This week’s worst performers

Zip Co (ASX:ZIP) -15.44%

The buy now, pay later provider slid further this week without a clear company-specific trigger, extending a run that's left the stock down close to 20% over the past year. No earnings update, regulatory action or guidance change explains the move, so this looks more like broader fintech and financial services sentiment turning cautious than anything specific to Zip.

Pro Medicus (ASX:PME) -14.59%

The radiology software company keeps sliding, now down 50% over the past year, with no earnings miss, lost contract or bad guidance behind it. The stock has fallen below its 50-day and 200-day moving averages, levels momentum funds often treat as a sell signal regardless of the underlying business. Analysts still see meaningful upside from here, so this looks like a valuation reset, not a fundamentals problem.

WiseTech Global (ASX:WTC) -14.11%

The logistics software company's slide continued, down almost 73% over the past year. It isn't about demand for CargoWise, which remains one of the world's leading logistics platforms, but governance, with reports the Australian Federal Police is investigating founder and executive chairman Richard White over alleged trafficking matters, which the company says relate to his personal capacity. FY26 results next month, where management has reaffirmed guidance for 79% to 85% revenue growth, could shift focus back to the business.

Four years ago, Morgan Stanley Infrastructure Partners (MSIP) walked away from buying Epic Energy. They'd been named preferred bidder in a 2022 auction for the gas pipeline owner, but couldn't agree on price with seller QIC and the deal fell through. This week, they both came back to the table and got it done, with MSIP agreeing to pay $1 billion for the business, which owns the 1,150-kilometre Moomba to Adelaide pipeline plus a 154-megawatt wind, solar and storage portfolio.

Four years is a long time for a valuation gap to close, and the reason it finally did comes down to data centres. MSIP's thesis this time is built around the explosive growth in electricity demand they're driving. That demand is expected to keep gas-fired power plants relevant in the grid for far longer than a renewables-only future would suggest, since gas can fill the gaps solar and wind can't cover on their own. A 57-year-old pipeline in South Australia has effectively become a bet on AI infrastructure needing reliable backup power for years to come.

It's not an isolated bet either. Epic Energy is the third gas pipeline deal in Australia and New Zealand in the past 12 months, following Brookfield's purchase of a majority stake in Clarus for NZ$2 billion and Stonepeak's acquisition of Allgas, the Queensland gas network serving around 120,000 households and businesses from Brisbane to northern New South Wales. Infrastructure funds are converging on the same idea at the same time, which either means they're onto something real about gas's staying power, or that everyone's crowding into the same trade before the data centre boom's energy assumptions get tested.

The deal still needs sign-off from the Foreign Investment Review Board and the ACCC. If the deal does, it's the third pipeline deal to get the green light in just twelve months, another sign gas infrastructure is back in favour with regulators and investors alike.

Australian exports to the US now face a 12.5% tariff, confirmed by the Trump administration on Friday for 60 trading partners. It replaces a temporary 10% levy that expired the same day. The increase came via a fresh legal mechanism, a US investigation into which trading partners aren't doing enough to stop forced labour in their supply chains. The administration says the findings justify higher tariffs on the countries it accuses of falling short. Australia landed in the higher 12.5% band alongside Japan, South Korea and China, while countries like the UK and Canada were assessed at 10%.

The new mechanism is important here. Back in February, the US Supreme Court struck down many of Trump's earlier tariffs, forcing the administration to find a new legal basis to keep them in place. Australia's case for an exemption looks reasonably strong on paper. The country has consistently earned the US's top rating on its own trafficking report, and the government argues its modern slavery laws are already stronger than most of the countries facing the lower 10% rate. However, the US hasn't budged yet.

For Australian exporters, the immediate damage is limited. Beef, gold and copper, the three biggest exports to the US, remain tariff-free, and Australia's exporters still benefit from the Australia-United States Free Trade Agreement, under which the US pays no tariffs on Australian goods heading the other way. This isn't about the tariff rate. It's a reminder that Australia's access to its biggest trading partner now runs on shifting legal workarounds, not settled policy.

Prime Minister Anthony Albanese says he'll raise the issue directly with Trump, though it's far from clear that will land any better than Australia's written submission did.

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