While global equity markets began April under pressure from ongoing macroeconomic challenges, they managed a modest recovery by month-end. Investor sentiment was buoyed by speculation that the US might ease tariffs and, in Australia, by relative political stability as elections approached.
The Australian stock market outperformed its global counterparts in April 2025, with the ASX 200 rising by approximately 2.9%. This outperformance was largely driven by strong results in the financial and materials sectors. Major banks benefited from robust earnings and share buybacks, while resource stocks attracted attention amid a global pivot towards commodities.
In contrast, the sharp drop in oil prices below $60 pressured global energy sectors, particularly in the US, where energy stocks fell by nearly 10%. This decline was driven by rising supply expectations and concerns about demand linked to trade tensions, creating notable sector divergence across global equities.
April also highlighted the increasing impact of geopolitical instability on market sentiment and economic data. A surge in volatility across key indicators was a reflection of erratic corporate behaviour: while some companies are accelerating production and stockpiling inventory in anticipation of potential tariffs, others are delaying investment or ceasing operations due to uncertainty about their business models. This behaviour is distorting economic data and complicating the task for policymakers and investors trying to interpret market trends with a reasonable level of confidence.
In this environment, conviction in short-term market direction is fleeting. As trade rhetoric escalates and policy clarity remains uncertain, traditional macroeconomic signals are becoming less reliable. Volatility has evolved from being a cyclical factor to being more structural.
Against this backdrop, the case for capital preservation has become more compelling. With future conditions hard to predict and the risk of missteps heightened, protecting downside risk is paramount. We believe investors should focus on resilience rather than chasing high-risk opportunities, positioning themselves not for short-term gains, but for long-term stability. When visibility is poor, it pays to focus on your feet!
Human Financial remains patient and cautiously positioned across our Dynamic portfolios, prioritising capital preservation in the face of ongoing volatility and policy-driven uncertainty. A shift towards higher risk exposure would require either a clear easing of US trade tensions—mitigating geopolitical risks—or a significant market correction that improves the risk/reward profile for growth assets.
Until these signals emerge, we will continue to favour resilience and flexibility, maintaining discipline in an environment where clarity remains elusive, and volatility is expected to persist. This approach has continued to pay off for investors in our Dynamic portfolios in these uncertain times.