March: Uncertainty over US Tariffs
- Rising fears of a global recession impacted global financial markets over the month, news was dominated with the US placing 25% tariffs on imports from Mexico and Canada and increasing tariffs on China.
- Australian Shares returned -3.4% over the month with the banking sector down -2.1% but it was the Diversified financials sector hit the hardest down -11.1% and the Small Cap market was also down, returning -3.6%.
- Global Shares returned -5.0% on a hedged basis and on an unhedged basis returned -4.7% due to global trade tensions with US indices like the S&P 500 and Nasdaq Composite recording their worst quarterly returns since 2022.
- Global small caps were also down returning -4.0%. Global small caps outperformed large caps over the month, by in large due to their cheaper valuations.
- Global emerging markets returned a modest +0.4% over the month with India, Brazil and Chinese regions all performing strongly.
- Global listed Property (hedged) sector returned -2.8% outperforming the broader equity markets.
- Listed Infrastructure (hedged) sector returned +1.6% over the month due to the decline in real yields and elevated inflation expectations.
- Fixed income was mixed with Australian bonds up due to positive news on inflation with Australian bonds returning +0.2% after the February RBA interest rate cut. Global bonds returned -0.4% with US core PCE inflation rising higher than expected in February.
- The Australian dollar AUD was up slightly against USD due to uncertainty around tariffs and prospect of further Fed rate cuts.
Job Market:
U.S.
- The annual unemployment rate rose to 4.2% in March 2025, the highest level since November and slightly above market expectations of 4.1%. The number of unemployed individuals increased by 31,000 to 7.08 million.
- U.S. Non-farm payrolls rose by +228,000 in March, and the unemployment rate remained at 4.2%. The Labour force participation ticked down slightly in March at 62.5%.
Locally
- The Consumer Price Index (CPI) in Australia rose 2.4% in the 12 months to February 2025. The top contributors were Alcohol and Tobacco (+6.7%), Food and Non-Alcoholic Beverages (+3.1%), and Housing (+1.8%)
- Australia’s seasonally adjusted unemployment rate remained at 4.1% in February 2025. Employment fell by 53,000 people and the number of unemployed by 11,000 people and the participation rate fell slightly to 66.8%.
Major Asset Class Performance (%)
Currency Markets
