The term “bloodbath” gets thrown around a lot in times like this. Mainstream media use it to invoke fear and uncertainty in the general population. In situations like these, it’s important to chase the facts.
What’s Happened?
US sharemarkets have fallen heavily in recent days, with most global markets (including our own ASX) following. In calendar year 2025, the S&P 500 (the US’s major stockmarket index) has fallen by 14% and the ASX has fallen by 10% (as at Monday, 7th April 2025). The quickness and intensity of this fall has put sharemarkets back on the front page.
Why?
Donald Trump’s tariff policies have significantly influenced global investment markets, creating waves of uncertainty and volatility. His administration’s imposition of sweeping tariffs, particularly on major trading partners like China and the European Union, has disrupted global trade flows and heightened fears of a trade war. These measures have led to increased costs for businesses reliant on international supply chains, prompting some companies to relocate production or adjust operations, often at a high expense.
Global stock markets have reacted sharply to these policies, with indices such as the Dow Jones and S&P 500 experiencing notable declines following tariff announcements. The uncertainty surrounding the scope and duration of these tariffs has also contributed to heightened market volatility, as investors grapple with potential impacts on corporate earnings, inflation, and economic growth. Australia is not immune from either the tariffs or the impact on our investment markets.
Additionally, retaliatory measures from affected countries have further strained international trade relations, exacerbating economic challenges. While some argue that these tariffs aim to bolster domestic industries, critics warn of long-term repercussions, including slower global growth and increased recession risks.
Is it a “Bloodbath”?
For both the S&P 500 and our ASX, we have essentially returned to the position we were 1 year ago. Given that the 2024 performance for the S&P 500 was 23% and 2023 was 24%, and the ASX returned 11% in 2024 and 13% in 2023, it’s fair to say that a correction was likely and perhaps imminent.
How many remember that in 2018, the S&P 500 fell by 20% on rising US-China trade tensions? These events seem to be all-consuming for a short period of time, before markets move onto something else.
As advisers who focus on investing for the long term, we try to avoid short term “noise”. “Bloodbath” heightens fear whereas “Markets return to 2024 levels” will not sell any newspapers!
It is often said that “volatility is the price you pay for performance”. Periods such as what we are going through right now are a reminder of this. At some point, investors far larger than us (institutional investors and large super/pension funds) will start to see value in investment markets and take advantage of beaten-down share prices. This will likely put a “floor” under market performance which will allow indexes to move forward.
What Should You Do?
I’ve written another article this morning which outlines our current position and view. Pleasingly, our view is replicated by many mainstream investment analysts and experts. Focussing on high quality investments and maintaining a long term view makes sense.
As I’ve said in that article, I don’t want to downplay how you may feel about all of this. Feel free to get in touch with us if you want to understand how this impacts your position.
