Time in the Market
Investor consternation proved prescient in April as the US administration announced sweeping tariffs on trade partners, triggering a fierce sell-off. Officials subsequently delayed the implementation of retaliatory tariffs by 90 days, reversing most if not all of the equity losses.
This highlighted the importance of remaining invested and avoiding impetuous decisions when markets move decisively.
What matters is time in the market, not timing the market.
Please click here to read our April 2025 markets report as a PDF.
Global Markets
Markets remained volatile in April, as sweeping US tariff announcements permeated through equities, bonds and economies.
On April 2, a near-universal 10% tariff on US imports came into effect, triggering a sharp selloff in both equity markets. The S&P 500 fell over 10% in the two days after the announcement, while the local ASX benchmark fell 8%.
The US also announced reciprocal tariffs for several countries with trade deficits, including China (+34%), Vietnam (+46%) and India (+26%).
On April 9, the reciprocal tariffs were delayed by 90 days, allowing trade partners time to negotiate new trade terms. Global markets promptly recalibrated, with major indexes paring back most if not all of the losses over the rest of the month.
China however was left off the exemption list. In a tit-for-tat battle, the US increased tariffs to 145% on Chinese goods. In return, Chinese authorities responded with a spate of duties totaling 125% on US imports and non-tariff measures such as
suspending critical mineral and magnet exports. Tensions appear to have eased, with a protracted negotiation likely.
Australia escaped relatively unscathed from April’s tariff announcements, receiving the baseline duty of 10%. It’s worth noting however the administration has flagged sector-specific tariffs on areas such as pharmaceuticals in the months ahead.
While this year’s tariff-induced turbulence has produced mixed year-to-date equity returns, the overwhelming majority of indexes have posted positive annual returns (see Figure 1). Moreover, returns have come from markets many would not have expected to perform. A good example is China, up 12.1% in 2025 and 25% over the past 12 months.
Data Source: JP Morgan
As always, please reach out to your adviser if you would like to discuss the recent volatility in more detail.
Tensions between China and the US, in addition to the unpredictability of further trade duties and subsequent retaliatory responses, continue to weigh heavily over global economies and firms, particularly in the US.
Recent ISM manufacturing data entered contraction territory, with supply executives halting new orders, production and new hires. Over in Europe, the ECB cut interest rates 25 basis points to 2.25%, citing that growth prospects had “deteriorated” due to heightened trade uncertainty.
Tariffs are also hitting US households. Consumer sentiment has fallen 32% in the past three months, the largest percentage fall since the 1990
recession. The International Monetary Fund has since downgraded global growth to 2.8%, down from the 3.3% target the institution published only three months ago.
In China, GDP increased 5.4% for the first quarter, reflecting a cashed-up local consumer after the government passed a raft of subsidies and
consumption policies in 2024. Firms also front-
ended shipments to the US, artificially boosting exports. Conversely, March GDP in the US dipped 0.3%, with domestic firms importing more to avoid duties.
Bonds whipsawed between the prospect of tariff-induced inflation and recessionary risk. In one week alone, US 10-Year Treasury Yields touched 3.87% before increasing to 4.59%.
Ultimately, global bond returns were positive in April, acting as a hedge against equity market volatility.
Oil prices failed to recover losses post the tariff announcement on April 2, with the US Energy Information Administration revising down demand for 2025 despite OPEC+ lifting production targets.
Other commodities, including iron ore, nickel, copper and aluminium, all finished the month lower on the aforementioned global economic concerns.
Gold continues to be a bright spot, surpassing US$3,500 as the crosswinds of trade policy and inflation encourage investors to seek safe-haven assets.
Australia Markets
In calmer circumstances, the S&P/ASX 200 closing 3.6% higher at 8,126 points would be an exceptional month. That increase, however masked what was a turbulent April, with the local benchmark falling markedly until recovering 13% from its low.
More than anything, the tremendous intra-month turnaround of the ASX reminds investors of the importance of time in the market, rather than timing the market.
An impassioned decision would be to divest when markets hit turbulence. Indeed, studies (for those interested, look up Daniel Kahneman’s loss aversion theory) show humans feel losses around twice as much as they do an equivalent win.
However, those investors would have missed the rapid upswing that delivered positive returns for local investors. Moreover, when one market or asset falls, other parts of the portfolio can mitigate the fall.
Finally, investors can be reassured that our portfolios are reviewed regularly by our internal Investment Committee.
The RBA met on the first day of April, deciding to keep interest rates unchanged at 4.10% after reducing them 25 basis points in March.
Despite markets expecting a further three rate cuts this year, the central bank is keeping a lid on expectations, noting several observations could sway the direction of future policy:
Labour availability remains a constraint for employers with an unemployment rate of 4.1%
Robust retail spending data could translate into higher economic growth
Conversely, private sector demand is weak, and a recovery in household consumption could fall short of expectations
The lag effect of higher interest rates and how this impacts business confidence and households
Broader uncertainty regarding global trade, namely US tariffs and nations taking retaliatory measures
All of this is a long way of saying policy direction is uncertain, so the RBA will need more data before altering the cash rate.
To that end, the March quarter's consumer price index (CPI) report confirmed inflation pressures were abating. Headline inflation was unchanged at 2.4%, marking two consecutive months in which inflation has fallen below the central bank’s 2-3% target range.
Trimmed mean inflation, which removes volatile energy and food categories and the central bank’s preferred measure, fell to 2.9%, the first time it has been within the target band since 2021.
Still, cost pressure remains. Rent inflation remains sticky above 5%. Food inflation also increased to 3.2%, up from the 3.0% recorded in the December quarter.
Interest rate markets moved quickly to point to a 25 basis point cut at the May meeting. Futures markets are pricing in 110 basis points of cuts by year-end, which would imply a cash rate of 3.0%.
The Australian dollar fell below US$0.60 in April, hitting a 5-year low against the greenback as the market digested tariff announcements. However, the losses were pared back over the month as currency markets rotated away from the US. The AUD finished the month at US$0.64.
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