In this article we look back at the key events from last week, look at the market outlook for this week and list the key economic events, data releases and IPOs to watch out for.

 

 

Summary of Last Week

Investors worldwide were holding their collective breaths, hoping for the best as US president Donald Trump ballyhooed incessantly his self-proclaimed “Liberation Day” announcement of the tariffs to be imposed by the US.

What they got was the worst, as the announced tariffs were higher than expected. The only thing liberated on 2 April was a loss of around $5 trillion dollars in value by the close of the trading week. The stampede came the morning after the announcement after the closing of the US markets on Wednesday the 2nd and continued through Thursday and Friday.

 

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The ASX 200 slipped back into correction territory, down 3.4% for the week and 2.44% on the last day of trading. The Energy Sector was crushed, down 8% on the day and 13.16% on the week, following the declining price of oil as commodity pricing also feared the impact of the tariffs and the possibility of a global recession. In addition to the 6.4% fall in Brent Crude, copper dropped 8.76%, and even safe haven gold fell 2.47%. The Technology Sector fell 8.31% on the week while the Materials Sector dropped 7.08%.On Friday, the ASX All Ordinaries Index saw $70 billion dollars in value vanish.

Defensive consumer staple stocks continued to fight the tide, with Woolworth’s Group (WOW) up 3.4% and Coles Group (COL) up 4.1%, with the Consumer Staples Sector up 2.53%.

The situation here in Australia dwarfed the calamity that befell US investors, with the world’s most watched index, the Dow Jones Industrial Average, closing the day after the Liberation Day fiasco down about 1,780 points, dropping an additional 2,200 points the following day.

The S&P 500 Index favoured by the investment community dropped 10% in the two trading days following their “Liberation” and closed the week down 9%. Only 14 stocks on the S&P 500 managed to escape the chaos with positive gains on the disastrous Friday close.

Australia was not spared, with the US planning to implement a 10% tariff on Australian exports into the US. Besides meat exports, the major impact facing Australia is supply chain disruptions in our other trading partners, most notably China.

 

Market Outlook For The Week

The once feared global trade war may already have begun as China has already retaliated, levying a 34.7% tariff on US imports, equalling the tariff levied on Chinese imports to the US. Other countries may follow suit, although a faint hope remains for negotiations to lower the tariffs. Reactions from other countries are likely to move markets this week.

The chairperson of the US Federal Reserve discussed the outlook for the situation in which we now find ourselves, stating the tariffs imposed by the US will lead to “higher inflation and slower growth.” Global investment bank JP Morgan raised its prediction for a US recession this year to 60%.

A recession in the US could ignite a global recession. Once again, the investment community and even the US president is looking to the Federal Reserve to save the day with interest rate cuts.

 

Economic Data

  • Wednesday – US – Fed Meeting Minutes
  • Thursday – China – Consumer Price Index (CPI)
  • Thursday – US – Consumer Price Index (CPI) and Jobless Claims Data
  • Friday – Producer Price Index (PPI) and Consumer Sentiment

Market participants can take a breath the week beginning on 7 April as the economic calendar is light.

It will be Wednesday the 9th of April before any news that could be catalytic comes out of the US, There is already talk President Trump is asking the US Fed to lower interest rates to ease the chaos following the tariff announcement. The Fed will release the minutes of their latest meeting, which is virtually certain to include commentary on interest rates.

On Thursday April 10th China and the US will release the CPI (consumer price index.) data with the US adding jobless claims data.

On Friday, the 11th the US will release the producer price index for March as well as consumer sentiment information.

 

New Listings and IPOs

The IPO market reflects the deteriorating market conditions with another IPO in TBA (to be announced) status withdrawing its application. This leaves only investment company , WAM Income Maximiser Limited listing on 30 April and cosmetic and laser clinic provider Stormeur Group scheduled to list on 3 June.

 

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