We take a look back at the key events from last week, check the market outlook for this week and list the key economic events, data releases and IPOs to look for.

 

 

Table of Contents

Summary of Last Week

The consensus opinion from market commentators around the world seems to be that US “softening” on trade and tariff policy ignited global market rallies. Here in Australia in a three day trading week, the ASX finished up 2.66% in a continuous upward movement beginning at the start of trading on Tuesday following the Easter Monday holiday, led by gains in the Big Four Banks, the Big Three iron ore miners, and select healthcare stocks. A decline in Aussie bond yields suggests some investors may be looking here as an alternative to growing concerns about US Treasury bonds.

The US markets also had a good week as markets everywhere saw calmer seas. The DJIA finished the week up 2.5%, underperforming both the S&P 500 – up 4.5% — and the NASDAQ – up 6.7%.

 

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Despite the positive week, cynics can claim the rally was sparked by “hope” not reality.

 

Market Outlook for the Week

The momentum change in the markets began with US president Trump reversing himself on two issues that badly shattered markets – the implied threat to remove the chairperson of the US Federal Reserve and the ratcheting up of the negative rhetoric aimed at China.

Trump walked back his threats on the head of the US Fed, and backed by comments from members of his cabinet, suggested the astronomical tariff levels proposed for China would be reduced.

Here are three quote from analyst comments appearing in the US financial website CNBC.

  • “Markets rallied on hopes of a breakthrough in the trade standoff between the U.S. and China”
  • “The market is relieved, of course — the worst talk is hopefully behind us — but we are still not at the end game.”
  • “On Tuesday afternoon, Trump put the (Fed Chair removal) matter to rest—for now.”

To add to the confusion, the White House saw its claim regarding ongoing trade talks with China quickly labeled “not true” by the Chinese.

The reality is that although the complete embargo of trade resulting from reciprocal tariffs around 150% may be avoided, President Trump claims they will not go down to zero, with speculation now beginning at levels as low as 20% and as high as 50%. It appears highly likely that whatever the ultimate outcome, tariffs will be higher than they were when Trump took office.

As the last week indicated, markets move on the news. In Australia, it appears the impact of tariffs may have been underplayed. The International Monetary Fund (IMF) now warns the tariffs will cost the Australian economy more than $13 billion in 2025 while increasing pressure on inflation.

The IMF now sees our economy growing by 1.6% this year, down from its January forecast of 2.1% growth with inflation expectations increasing to 2.5% this year, up from 2.0%.

Finally, Aussie investors should consider this quote from the weekly market review appearing in the Sydney Morning Herald;

The hope along Wall Street has been that Trump would lower his tariffs after negotiating trade deals with other countries, and Trump said he would be “very nice” to the world’s second-largest economy and not play hardball with Chinese President Xi Jinping.

The reality is no one has an inkling how low the tariffs may go, what is happening with trade deals with other countries, and how the situation with China will play out. The answers will dominate weekly market outlooks for months to come.

 

Economic Data

  • Monday – US – Dallas Fed Manufacturing Index
  • Tuesday – US – Conference Board Consumer Confidence Survey, S&P Case/Shiller Housing Price Index
  • Wednesday – Australia – Australian Consumer Price Index (CPI)
  • Thursday – Australia – import/export data, RBA Commodity Price Index.
  • Thursday – US – jobless claims data, ISM Manufacturing Employment Index and PMI
  • Friday – Australia – Australian Producer Price Indices, Retail Sales data
  • Friday – US – employment reports, nonfarm payrolls, unemployment rate

This week has a time bomb announcement out of the US on Wednesday when the long anticipated and feared advance estimate of US GDP will be released. The Atlanta Federal Reserve Bank’s GDP US GDPNow Model was recently revised to negative growth of 1.8%, up from a prior estimate of a 2.1% decline.

On Monday April 28th the US Dallas Fed Manufacturing Index will be released with an assessment of factory activity in the state of Texas.

On Tuesday, April 29th, the Conference Board Consumer Confidence Survey will be published, along with the S&P Case/Shiller Housing Price Index.

On Wednesday April 30th the Australian Consumer Price Index (CPI) for the quarter over quarter and year over year periods will be released. The CPI is a critical factor impacting interest rate decisions from the Reserve Bank of Australia (RBA).

In the US, GDP estimates along with multiple personal consumption and spending expenditure surveys will be released.

On Thursday May 1st Australia will release import/export data and prices along with the RBA Commodity Price Index.

The US will release jobless claims data along with the ISM (Institute for Supply Management) Manufacturing Employment Index and PMI.

On Friday May 2nd the year over year and quarter over quarter Australian Producer Price Indices will be released, along with quarter over quarter and month over month Retail Sales data.

The US will release employment reports including hourly earnings, nonfarm payrolls, and the unemployment rate.

 

New Listings and IPOs

Australia’s IPO market remains stuck in neutral, with only two upcoming IPO listings on the ASX — investment company , WAM Income Maximiser Limited listing on 30 April, and cosmetic and laser clinic provider Stormeur Group scheduled to list on 3 June.

The US market appears to have shifted into reverse with uncertainty over US tariff policy and interest rate cuts giving pause to potential entries into the IPO market.

 

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