ASX market trends May 2025: Dividend strength, tech rebound, and cautious optimism

1. Defensive dividend stocks back infavour

Income-hungry investors continued to rotateinto dividend-paying blue chips, with steady buying seen acrossinfrastructure, energy, and banking names.

Yield-focused portfolios benefited fromstrength in:

• APA Group (ASX: APA) and Dalrymple     Bay Infrastructure (ASX: DBI), supported by stable earnings and     distribution guidance.
• ANZ Group Holdings (ASX: ANZ),     which lifted investor confidence following stronger-than-expected interim     results and a solid dividend payout.
• Dexus Industria REIT (ASX: DXI),     which found support amid resilient demand for industrial real estate,     despite higher interest rates.

Rising cash rates have made term deposits moreattractive in theory, but equity income remains compelling when fully frankeddividends are taken into account.

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2. Tech and growth stocks show signs ofrecovery

ASX growth shares — which were heavily soldoff in Q1 — mounted a quiet comeback in May, led by a rebound in global techsentiment and stronger-than-expected results from key players.

• WiseTech Global (ASX: WTC) gained     ground following upbeat forward guidance, as demand for global supply     chain optimisation remains robust.
• Xero (ASX: XRO) and Altium (ASX:     ALU) also caught a bid, reflecting renewed interest in cash-generating     tech names with pricing power.
• Investors rotated back into the Global X FANG+ ETF (ASX:     FANG), mirroring Wall Street’s strength as Nvidia and Microsoft pushed     to fresh highs.

While valuations remain a concern in someareas, investors appear more willing to pay up for companies with visiblerevenue growth and global scalability.

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3. Resource sector performance mixed

Commodities had a patchy run in May, asweaker-than-expected Chinese manufacturing data dampened iron ore sentiment,while energy prices remained broadly stable.

• BHP Group (ASX: BHP) and Rio     Tinto (ASX: RIO) drifted lower, tracking iron ore prices.
• Boss Energy (ASX: BOE) remained in     focus amid growing institutional interest in uranium as a long-term clean     energy play. The stock continues to benefit from momentum in the global     nuclear energy transition narrative.

The materials sector saw a bifurcation:traditional miners faced near-term demand concerns, whileenergy-transition-themed plays attracted fresh capital.

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4. Cautious optimism returns to consumerstocks

Retail and consumer shares staged a modestrecovery, despite ongoing pressure on household budgets.

• Inghams Group (ASX: ING) and Ricegrowers     (ASX: SGLLV) saw renewed interest, as investors sought companies with     pricing power and essential product offerings.
• Aristocrat Leisure (ASX: ALL)     climbed following positive updates on its online gaming division,     signalling resilient discretionary spending in select categories.

Consumer confidence data remains mixed, butthe market is beginning to price in a possible RBA rate cut later in the year,which could ease the pressure on households.

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5. M&A whispers and capital raisingsreturn

After a quiet first quarter, May saw apickup in deal activity and equity raisings across the ASX:

• Mid-cap firms in the mining services and healthcare sectors     launched placements to shore up balance sheets.
• Private equity interest in ASX-listed infrastructure and real     estate assets appeared to intensify, supported by the attractive yields     and discounted valuations.

While M&A activity hasn't fullyreturned to pre-2022 levels, corporate confidence appears to be stabilising.

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Final word

Overall, May 2025 marked a turning pointfor ASX investors, with lower volatility, renewed optimism in growthsectors, and strong demand for reliable income stocks. While risks remain —particularly around global growth and geopolitics — the tone of the market hasbecome more constructive.

Looking ahead, all eyes will be on upcomingeconomic data, the June RBA meeting, and FY25 earnings guidance, as investorslook for confirmation that the market's recent calm has firmer foundations.

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