April brought heightened market volatility driven by US tariff hikes and recession fears. Despite this, Australian and European equities held up well. In this edition of Four Questions with the Asset Allocators, Damian Hennessey unpacks:
- US tariff shock & macro impact: The Trump administration’s tariffs pushed average US rates from 2.5% to as high as 28%, sparking fears of higher inflation and reduced growth, with a real risk of recession emerging
- market behaviour & anomalies: Despite equity market drawdowns, US bonds failed to rally, and the US dollar weakened, which was unexpected during such periods. However, markets like Europe and Australia showed resilience
- outlook & expectations: Will the US economy slow in the months ahead? Australian conditions appear stable, and with easing inflation, the RBA may begin cutting rates soon, and
- portfolio positioning: How we’ve stayed the course, leaning into quality assets, adding real assets like infrastructure, adjusting global rates exposure, and modestly increasing the hedge ratio based on AUD valuation.
13 minute watch
