Market Outlook for April 7, 2025: Positive Trend Expected

Looking back at the events of the previous week, investors braced themselves for US President Donald Trump’s much-anticipated “Liberation Day” announcement regarding tariffs. However, the outcome was far from ideal as the tariffs announced surpassed expectations, leading to a staggering loss of approximately $5 trillion in market value by the end of the trading week. The aftermath of the announcement triggered a rush for the doors as markets plummeted following the news.

The ASX 200 fell back into correction territory, experiencing a 3.4% decline for the week and a 2.44% drop on the final day of trading. The Energy Sector bore the brunt of the impact, plummeting by 8% in a single day and 13.16% over the week due to concerns over the effects of the tariffs and potential global economic downturn. Brent Crude oil prices fell by 6.4%, copper by 8.76%, and even gold, considered a safe-haven asset, dropped by 2.47%. Similarly, the Technology Sector saw an 8.31% decline, while the Materials Sector dropped by 7.08%. On Friday alone, the ASX All Ordinaries Index witnessed a staggering $70 billion loss in value.

Despite the widespread turmoil, defensive consumer staple stocks managed to weather the storm to some extent. Woolworth’s Group (WOW) saw a 3.4% increase, and Coles Group (COL) experienced a 4.1% rise, leading to a 2.53% uptick in the Consumer Staples Sector. The situation in Australia mirrored the chaos that ensued in the US, with the Dow Jones Industrial Average dropping by approximately 1,780 points and suffering another 2,200-point decline the following day. The S&P 500 Index also took a hit, plummeting by 10% in the two days post the ‘Liberation’ announcement and concluding the week with a 9% decrease, sparing only 14 stocks from negative repercussions.

Australia’s predicament worsened with the US planning to impose a 10% tariff on Australian exports. The disruption in the supply chain in other trading partners, particularly China, posed additional challenges for the Australian market. Looking ahead to the current week, concerns loom over the initiation of a potential global trade war, with China retaliating by imposing a 34.7% tariff on US imports, matching the US tariffs on Chinese imports. The prospect of other countries following suit while holding onto hope for tariff reductions through negotiations remains uncertain.

The US Federal Reserve Chair expressed apprehensions about the impact of US tariffs, anticipating higher inflation and slower economic growth. JP Morgan revised its forecast for a US recession to 60%, raising concerns about a global recession if such a scenario were to unfold. The investment community, as well as the US government, looks to the Federal Reserve for possible interest rate cuts as a measure to mitigate the situation.

Economic data to watch out for includes the release of Fed Meeting Minutes from the US on Wednesday, followed by China’s Consumer Price Index (CPI) and the US Consumer Price Index (CPI) and Jobless Claims Data on Thursday. Wrapping up the week will be the US Producer Price Index (PPI) and Consumer Sentiment data on Friday. Market participants can expect a light economic calendar for the week, with pivotal news emerging from the US as President Trump urges the Fed to consider interest rate cuts following the tariff announcement. Amidst the uncertain market conditions, the IPO market reflects a declining trend with only a few new listings, signifying the current volatile and apprehensive market environment.