What has happened in markets?                                 

Markets have once again responded sharply to escalating trade tensions, as President Trump overnight announced sweeping new tariffs on key US trading partners — branding it a “Liberation Day” initiative aimed at reshaping global trade. The reaction has been swift. In Australia, the S&P/ASX 200 initially dropped more than 1% after a new 10% tariff was imposed on Australian exports to the US. Prime Minister Albanese described the move as “unwarranted” and announced targeted support for impacted industries. Across Asia, markets also retreated, with Japan’s Nikkei 225 falling nearly 3% and South Korea’s Kospi down close to 1%, following US tariffs of up to 25% on goods from both countries. European and US share markets are expected to follow suit, with futures pointing to declines when trading opens later this evening. 

What is causing the recent market volatility?

President Trump’s latest tariff announcements have added further fuel to the market volatility that began in late February 2025. Financial markets remain unsettled, with shifting US trade policies creating ongoing uncertainty. Trump has previously warned that the US economy may face some “short-term pain” — a remark that has weighed on investor sentiment.

The broader sell-off reflects rising concerns that renewed trade tensions could lift inflation, disrupt global supply chains, and place pressure on economic growth. Continued uncertainty may prompt central banks — including the Reserve Bank of Australia — to consider further interest rate cuts as a precaution.

As outlined in earlier updates, while the US tariff saga has been a key trigger for recent volatility, it follows a period of strong performance. The S&P 500 rose by more than 20% in each of 2023 and 2024, pushing valuations to elevated levels. From this starting point, markets have become more sensitive to shifts in the outlook, making them particularly reactive to any emerging uncertainty around future growth expectations. 

What are we doing in response?

While market conditions have become more turbulent, our view remains unchanged. We continue to monitor developments closely and, while there is no need to adjust your portfolio at this stage, we are thoughtfully considering whether some minor changes may be appropriate in light of recent events. Your portfolio remains anchored by a well-diversified mix of growth and defensive assets, managed by high-quality fund managers — a structure designed to provide stability and resilience through periods of market volatility. 

Why market volatility is not a reason to panic

Markets don’t move in straight lines. Ups and downs are part of the normal investment cycle, influenced by factors such as interest rates, inflation, economic shifts, and global events. While short-term drops can be unsettling, history shows that markets tend to recover — and reward patient investors over time.

Whether you’re building retirement savings or drawing income in retirement, your investment portfolio has been structured to meet your needs. This means balancing short-term stability with long-term growth, so temporary market fluctuations shouldn’t derail your financial goals.

Growth assets reward patience

Investing in shares and other growth assets has historically delivered higher returns over time, while more defensive investments like cash and bonds help cushion short-term volatility. Consider these key points:

• Markets recover — While short-term declines are expected, long-term trends have remained upward.
• Growth outperforms — Historically, shares have outpaced inflation and outperformed defensive assets.
• Timing the market is risky — Missing even a few key rebound days can significantly reduce long-term returns.

Staying the course

For those still accumulating wealth, downturns can be an opportunity to buy more at lower prices. For those in retirement, portfolios are designed with income-producing and defensive assets to support your near-term needs. No matter your stage, the best approach remains:

• Stay invested
• Stay diversified
• Stay focused on your goals

We’re here to support you through all market conditions. If you have any questions or would like to discuss anything about your portfolio in more detail, please don’t hesitate to reach out.