Market Wrap April 2025
March: Uncertainty over US Tariffs
- Rising fears of a global recession impacted global financial markets over the month, news was dominated with the US placing 25% tariffs on imports from Mexico and Canada and increasing tariffs on China.
- Australian shares returned -3.4% over the month with the banking sector down -2.1% but it was the Diversified financials sector hit the hardest down -11.1% and the Small Cap market was also down, returning -3.6%.
- Global Shares returned -5.0% on a hedged basis and on a unhedged basis returned -4.7% due to global trade tensions with US indices like the S&P 500 and Nasdaq Composite recording their worst quarterly returns since 2022.
- Global small caps were also down returning -4.0%. Global small caps outperformed large caps over the month, by in large due to their cheaper valuations.
- Global emerging markets returned a modest +0.4% over the month with India, Brazil and Chinese regions all performing strongly.
- Global listed Property (hedged) sector returned -2.8% outperforming the broader equity markets.
- Listed Infrastructure (hedged) sector returned +1.6% over the month due to the decline in real yields and elevated inflation expectations.
- Fixed income was mixed with Australian bonds up due to positive news on inflation with Australian bonds returning +0.2% after the February RBA interest rate cut. Global bonds returned -0.4% with US core PCE inflation rising higher than expected in February.
- The Australian dollar AUD was up slightly against USD due to uncertainty around tariffs and prospect of further Fed rate cuts.
Job Market:
U.S.
- The annual unemployment rate rose to 4.2% in March 2025, the highest level since November and slightly above market expectations of 4.1%. The number of unemployed individuals increased by 31,000 to 7.08 million.
- U.S. Non-farm payrolls rose by +228,000 in March, and the unemployment rate remained at 4.2 percent. The Labor force participation ticked down slightly in March at 62.5%.
Locally
- The Consumer Price Index (CPI) in Australia rose 2.4% in the 12 months to February 2025. The top contributors were Alcohol and Tobacco (+6.7%), Food and non-alcoholic beverages (3.1%), and Housing (+1.8%).
- Australia's seasonally adjusted unemployment rate remained at 4.1% in February 2025. Employment fell by 53,000 people and the number of unemployed by 11,000 people and the participation rate fell slightly to 66.8%.
Major Asset Class Performance
| Asset Classes | 1 Month % | 1 Year % | 5 years (p.a.) % |
|---|---|---|---|
| Australian Shares | -3.4 | 2.8 | 13.2 |
| Australian Small Companies | -3.6 | -1.3 | 10.2 |
| Global Shares (Unhedged) | -4.7 | 12.3 | 15.8 |
| Global Shares (Hedged) | -5.0 | 6.7 | 15.2 |
| Global Small Companies (Unhedged) | -4.0 | 4.4 | 13.0 |
| Global Emerging Markets (Unhedged) | 0.4 | 13.2 | 7.6 |
| Global Listed Property (Hedged) | -2.8 | 3.6 | 5.6 |
| Listed Infrastructure (Hedged) | 1.6 | 13.7 | 8.3 |
| Australian Fixed Income | 0.2 | 3.2 | -0.5 |
| International Fixed Income | -0.4 | 3.7 | -0.5 |
| Cash | 0.4 | 4.5 | 2.2 |
Source: Lonsec iRate, Rhombus Advisory, 31 March 2025
Indices used: Australian Shares: S&P/ASX 200 Accumulation Index, Australian small companies: S&P/ASX Small Ordinaries Accumulation Index, Global shares (hedged): MSCI World ex Australia Net Total Return (in AUD), Global shares (unhedged): MSCI World ex Australia Hedged AUD Net Total Return Index; Global small companies (unhedged): MSCI World Small Cap Net Total Return USD Index (in AUD); Global emerging markets
(unhedged): MSCI Emerging Markets EM Net Total Return AUD Index; Global listed property
(hedged): FTSE EPRA/NAREIT Developed Index Hedged in AUD Net Total Return; Listed Infrastructure (hedged); FTSE Global Core Infrastructure 50/50 NR Index (AUD Hedged)
Cash: Bloomberg AusBond Bank Bill Index; Australian fixed income: Bloomberg AusBond Composite 0+ Yr Index; International fixed income: Bloomberg Barclays Global Aggregate
Total Return Index Value Hedged AUD
Please note: Past performance is not indicative of future performance.
Currency Markets
| Asset Classes | 1 Month % | 1 Year % | 5 years (p.a.) % |
|---|---|---|---|
| AUD / USD | 0.62 | 0.6 | -5.8 |
| AUD / GBP | 0.48 | -2.0 | -5.3 |
| AUD / EURO | 0.58 | -3.5 | -5.1 |
| AUD / YEN | 93.55 | 0.2 | 0.9 |
Source: Lonsec iRate, Rhombus Advisory, 31 March 2025 All foreign exchange rates are rounded to two decimal places where appropriate.
Please note: Past performance is not indicative of future performance.
