April 2025 Market Review: Business Research and Insights

In the past month, financial markets experienced significant volatility due to uncertainties surrounding trade tariffs, triggered by US President Trump’s ‘Liberation Day’ announcement. The Australian S&P/ASX 300 Index saw a rise of +3.60%, while the US S&P 500 declined by -0.68%. The initial shockwave created a massive downturn in early April, only to be followed by a gradual recovery.

As April unfolded, market volatility gradually subsided from its peak levels. Historically, periods of heightened volatility have often created strategic buying opportunities for investors with a medium to long-term investment strategy. However, caution remains prevalent among investors given the ongoing ambiguity surrounding trade negotiations.

The equity markets experienced a whirlwind of fluctuations throughout April. Despite the S&P/ASX 300 Index rising by +3.60%, the US S&P 500 witnessed a decrease of -0.68%. The initial turbulence at the beginning of the month saw both indices plummet, with the US S&P 500 reaching a low of -11.19% and the S&P/ASX 300 down by -6.07%. This turbulence was primarily catalyzed by President Trump’s unexpected declaration of elevated trade tariffs on April 2, sparking apprehension among global investors. The ensuing tit-for-tat tariff announcements between the US and China raised concerns of a trade war that could potentially inflate global inflation rates, weaken global economic growth, and undermine the traditional haven status of the US dollar.

In response to the tariff escalations, China announced reciprocal tariffs, which were then met with further tariff increases from the US, resulting in a near trade stalemate by the end of the month. With the US heavily reliant on Chinese manufacturing capacities, consumers could face supply shortages for affected products if negotiations fail to yield favorable outcomes swiftly.

A notable surge in the US 10-year bond yield acted as a pivot point, prompting President Trump to declare a 90-day ‘cooling off’ period to allow space for diplomatic negotiations. This pause provided a reprieve for markets, leading to substantial gains on the day of the announcement. Subsequently, volatility subsided, and markets gradually regained their prior losses over the ensuing weeks. Despite fluctuating trends, the tech-laden NASDAQ index managed a monthly increase of +0.88%, while European markets closed marginally lower, with the STOXX Europe 600 benchmark down by -1.21%.

Bond markets mirrored equity market volatility in April, with the US 10-year bond yield initially plummeting below 4% and then sharply spiking to nearly 4.50% amid concerns of a safe-haven status erosion. The ensuing market instability prompted the 90-day respite for trade negotiations, raising expectations of multiple interest rate cuts by year-end to stimulate growth. Concurrently, commodity markets, apart from gold, experienced downturns as demand apprehensions intensified. Gold, as a traditional safe-haven asset, surged past the US$3,500 threshold before receding with volatility recalibration and USD stabilization. Oil prices, impacted by global economic slowdown apprehensions, dipped significantly, whereas copper, sensitive to global growth prospects, rebounded gradually through the month. Iron ore prices also declined due to concerns related to China tariffs and global steel demand uncertainties. Notably, BHP remained steady, while Rio Tinto saw minimal gains.

The Australian market’s response to tariff uncertainties was more measured, given the limited impact of US tariffs on Australia and its perceived safe-haven status. Notably, Consumer Staples and Communication Services sectors outperformed, reflecting their defensive nature during volatile market conditions. Banks also thrived, benefitting from increased market inflows. Meanwhile, healthcare stocks faced pressure from ongoing pharmaceutical tariff concerns. The sectoral dynamics were complemented by notable movements in specific stocks, with large-caps slightly outperforming small-caps in response to various market drivers.

Overall, April’s market volatility underscored the impact of trade uncertainties on global financial landscapes, emphasizing the necessity for a cautious yet strategic investment approach amidst evolving market dynamics.