7 April 2025 | Weekly Snapshot

Did you know?

The below chart shows a history of the US stock market from 1926 to 2016. What we can see is that the down markets (red areas) have historically lasted between 1-3 years, whereas the up market (blue areas) have been much longer in duration. The down markets have also been much shallower (i.e. smaller losses) when compared the up markets. Taken together, it shows the value of staying positive and investing for the long run.

Market Movements

Markets were sold aggressively last week in response to President Trump’s 2nd April announcement regarding the U.S.A’s reciprocal tariff plans, which were worse than expected. A 10% minimum tariff will apply to all imports coming into the U.S. beginning April 5 while higher tariffs will be charged on countries that the U.S. has larger trade deficits with. The new tariffs are estimated to raise the effective tariff rate on U.S. imports from 2.3% in 2024 to between 20% – 25%, the highest in at least 100 years. China announced retaliatory tariffs, matching the U.S. reciprocal tariff rate of 34%.

The tariff announcement, and China’s retaliation, drove risk-off sentiment in markets, with equities finishing the week sharply lower and U.S. Treasury yields declining to their lowest since October 2024. Tariffs pose a headwind to U.S. economic growth and put upward pressure on prices in the near term. However, the U.S. economy is entering this period from a position of labour market strength. Additionally, the Federal Reserve is likely to step in to support softening economic growth if labor-market conditions show meaningful signs of weakening.

While volatility is never comfortable, we recommend investors stick with their long-term investment strategy, with an emphasis on quality and diversification. Avoid making emotionally charged investment decisions and remember that time in the market has proven to be a better strategy over time than trying to time yourself in and out of the market. Whilst the above negatives are now clear, a few key positives include:

• Interest rates cuts (markets now expecting interest rates to fall towards 3% in Australia by year end)
• Some economic rationality restored between China/USA

Portfolio Movements

Wisetech Global appoints independent non-executive Directors

• WiseTech announced the appointment of two new non-executive directors, which was a requirement following the recent resignations of multiple non-executive directors.
• A large industry superfund had previously announced that they exited Wisetech based on governance concerns, so the new appointments is a small step in the right direction.
• Wisetech is a leading provider of logistics software solutions with 16,500+ customers across 195 countries

APRA has asked ANZ to hold additional capital (A$250m)

• APRA, Australia’s banking regulator, will force ANZ to hold an extra $250 million on its balance sheet to ward off cultural risks, increasing the total capital add-on to $1 billion. This is the second such move. Last year, APRA took the capital buffer from $500 million to $750
• The move is in response to improve weaknesses in risk management following several incidents last year including the govt bond trading scandal.
• ANZ shares have materially underperformed ‘rivals’ CBA and Westpac by approx. 20% over the past 12 months

YouTube turns 20 yrs old – Could be worth US$500Bn.

• Google owned YouTube turned 20 years old recently and is the second-largest media company in the world by revenue at $54.2 billion, trailing only Disney. Youtube is on track to take the top spot this year, however.
• If YouTube were a standalone business, it would be worth around 500 billion, or about 30% of Google’s current valuation.
• Last year YouTube generated global ad revenue of $36.15 billion, up 15%. YouTube’s subscription revenue topped $15 billion, generated by YouTube TV, the biggest internet-delivered live TV service in the U.S. with over 8 million customers.

The Week Ahead

• Thursday 10 April: USA CPI: Year on Year for March CPI is expected to be 2.6% compared with 2.8% in February, Initial Jobless Claims are expected to be 224k for the week, up slightly on the previous reading of 219k, while Continuing Claims are expected to have eased slightly to 1.884m from 1.903m.
• Friday 11 April: USA PPI Final Demand MoM for March is expected to be 0.2% compared with 0.0% in February while the Federal Budget Balance is expected to have contracted to negative US$130.0b in March compared with -US$236.6b in February
• Saturday 12 April: USA University of Michigan Sentiment is expected to have contracted in April to 54.0 from 57.0 in March.