Share markets saw wild swings during April. US President Donald Trump stunned markets with his announcement of “Liberation Day” tariffs on most foreign countries, including a 34% reciprocal tariff on Chinese goods to be applied on top of the 20% announced earlier in the year. A relatively modest tariff of 10% on Australian goods was also announced. China retaliated several times, raising tariffs on US imports and President Trump responded in-kind. By month end, US tariffs on Chinese imports stood at a total of 145% and Chinese tariffs on US imports stood at 125%. China also announced sanctions on several US officials. As markets swooned, President Trump announced a 90-day pause on the implementation of the previously announced Liberation Day tariffs on all countries other than China, stating that a 10% flat tariff would instead apply during the 90-day negotiation window (25% would still apply on steel and aluminium, vehicles and vehicle parts and goods not covered under the USMCA trade deal with Mexico and Canada). The announcement spurred a massive 9.5% rally in the S&P500 and a 12% rally in the NASDAQ, the 3rd best single-day gains ever recorded. President Trump publicly lambasted US Federal Reserve Chairman Jerome Powell for his hesitation to lower the Federal Funds rate. Later in the month, US consumer sentiment plunged to lows not seen since the outbreak of post-covid inflation, reflecting concerns about the tariff war. US job openings fell to 7.2 million, missing expectations of 7.5 million and US GDP growth for Q1 declined -0.3% annualised, driven by a surge in imports ahead of tariffs and reduced Government spending from Elon Musk’s work at the Department of Government Efficiency.
The ASX300 Accumulation Index gained 3.6% and A-REITs gained 6.3%. Global share markets returned -0.5% and currency-unhedged investors returned -1.8%, hindered by the AUD which gained against the US dollar but declined against the Japanese Yen and the Euro. The Australian Composite Bond index gained 1.7% as Australian bond yields declined during the month.
The Australian 10-year government bond yield declined by -0.22% to 4.16% and the US 10-year government bond yield fell -0.04% unchanged at 4.16% at month end.
Disclaimer:
The above is intended as general market commentary only and is not intended as, and does not constitute, advice of any kind. No liability is accepted for any action taken based on the above or for any loss suffered as a result of reliance on the same.
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