Weekly recap
What happened in markets
The Australian sharemarket gained 1.9% last week and rose for a second-straight week. This was fuelled by optimism surrounding the potential easing of US-China trade tensions, following comments from US Treasury Secretary Scott Bessent suggesting the current tariffs are unsustainable and may be reduced. These developments boosted investor confidence, leading to gains across various sectors. As a result, the Financials (+2.8%) and Information Technology (+2.1%) sectors led the ASX, as all of the industry sectors enjoyed gains throughout the week. Improving confidence around global trade pushed oil prices higher off recent lows and the Energy sector gained 1.8%.
US sharemarkets rose last week, as the S&P 500 and NASDAQ posted their second-best weekly performances of the year. Despite underperformance at the beginning of the week, driven by escalating US-China trade tensions and concerns about the US Federal Reserve’s independence, sentiment improved as trade updates suggested potential tariff reductions and better relations with Japan and India. The major technology names were higher, as NVIDIA Corporation added 9.4%, while Tesla rose 18.1%. Chinese technology names also benefitted towards the end of the week, as there were suggestions that tariffs on China could come down substantially, however not to zero. The Federal Reserve indicated they will continue to be data dependant in relation to interest rate cuts, despite President Trump offering his support for interest rate cuts to support economic growth.
European sharemarkets were also higher last week, buoyed by easing US-China trade tensions and reports of potential tariff reductions. The Euro STOXX 600 rose 2.8%, as investor sentiment benefitted from positive comments surrounding a potential deal between the US and South Korea, India and Vietnam. Despite this, the International Monetary Fund downgraded its global growth forecast to 2.8% for 2025, down from 3.3% in January, as European economic surveys signalled slowing activity, particularly in services. As for sector performance, the Automakers sector (+5.8%) benefitted from tariff reduction talks, while the Basic Resources (+5.2%) and Information Technology (+5.1%) sectors also rose.
Stock & sector movements
What caught our eye
After a challenging start to April, investors enjoyed some relief last week, with equity markets rebounding strongly. This was largely driven by optimism around constructive trade developments, positive company reports and dovish comments from US Federal Reserve officials.
The US' technology heavy NASDAQ index led gains, finishing up +6.7%, marking its strongest weekly performance in recent memory. The S&P 500 added +4.6%, meaning it closed Friday down -5.7% calendar year-to-date and just -1.5% lower for the month of April. While there are still a few trading sessions left in April, it is astonishing to think that US sharemarkets may finish higher in April, after Trump’s ‘Liberation Day’ and what looks to be a major paradigm shift for global trade, which saw it down -11.2% at one point for the month.
Markets initially faced pressure as the impact of US President Trump's tariff policies rattled investor confidence. However, sentiment improved significantly mid-week following hints the US could soon strike trade deals with key partners, including China, Japan, and South Korea. The prospect of reduced tensions with China was also especially welcomed, given fears of prolonged economic damage.
Another key piece of news that helped sharemarkets end higher was Trump’s assurance that he had no intention of firing the head of the Federal Reserve, Jerome Powell. Up until that time, Trump had been poking and prodding Powell publicly, calling him “Mr. Too Late” and a “major loser”, given the Fed had not lowered interest rates. This called into question the future independence and credibility of the Fed, should Trump have tried to meaningfully interfere.
Noteworthy US company earnings results also helped buoy sentiment. Google’s parent company, Alphabet (+6.8%), led this notion, after strong quarterly profits. This, along with Alphabet’s continued investment in artificial intelligence, highlighted that tech fundamentals remained robust despite economic uncertainty. Interestingly, despite reporting one of its worst quarters, Tesla shares surged +18.1% across the week, after CEO Elon Musk announced plans to spend more time steering Tesla and less time at the White House.
Looking ahead, investors will be closely monitoring upcoming US economic data, particularly employment figures, to gauge recession risks. Quarterly earnings season reports from other major companies will also provide further insight into the broader health of the economy. Despite recent improvements, analysts caution that tangible progress on trade negotiations will be essential to sustain market gains.
Overall, while April has been turbulent, last week's rally underscores the resilience of markets and highlights opportunities amid volatility. The Investment Committee will continue to monitor markets closely and make adjustments to the Model Portfolios as required.
The week ahead
Domestically, the Consumer Price Index data will be released, along with the Retail Sales data.
Overseas, Nationwide Housing Prices will be revealed in the UK, while investors will gain an insight into Consumer Confidence levels in the Eurozone, and the Unemployment Rate will be released in the US.
Company Reports
Wade is the head of the Investment Services division at Cutcher & Neale and has over 10 years of industry experience in accounting and investment advisory roles.
Ryan is our Portfolio Manager, bringing over 15 years of experience in managing multi-asset investment portfolios with a specialisation in fundamental equity analysis.
