Quarterly newsletter, March 2025

Cutting into a trade war

The calendar year began well for markets and diversified portfolios. However, the outlook rapidly deteriorated in the US during the month of March, driven by fears around short-term inflation, escalating tariffs and the general unpredictability of the direction of the US Administration. These factors triggered sharp declines in Wall Street, particularly in the final week of the month. Adding to the complexity, ongoing geopolitical conflicts in Ukraine and the Middle East continue to complicate the global economic outlook. The ASX 200 fell 4.88% in March, with similar losses seen across global equity markets. These downturns have continued into April.

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Following the rate cut to 4.10% in February, the RBA held the cash rate steady in March. RBA Governor Michelle Bullock has indicated that further rate cuts may be necessary in the coming months to defend economic growth, particularly considering the prospects of a global trade war due to US tariffs. Bond markets are now pricing in two additional rate cuts in 2025.

Following lows in January not seen since October 2022, the Australian Dollar has shown some slight growth in March, however ultimately ended lower at 62.47 US cents, still down 6.20% from the start of the financial year. Persisting economic pressures around the world and the talk of ongoing interest rate cuts will likely further weaken the AUD.

Domestically, the Australian economy grew 0.6% in the December quarter and 1.3% across the year, an anaemic performance at best. Over this same period, Australia saw a 0.9% increase in household wealth, reflecting some security in consumer finances. Inflation has also seen some slight softening at 2.4% in the 12 months to February, down from 2.5% in January.

According to the Melbourne Institute and Westpac Bank Sentiment index, consumer sentiment recorded a notable rise in March of 4%. It is likely the positive sentiment will turn down, at least temporarily, until the new Australian government are elected and there is clarity in US economic policy. Should conditions take a severe downturn, we expect governments will again support economic growth, and by extension, asset prices.

Returns for the 2025 Financial Year (9 months)

  • All Ordinaries: 8,053.2, up 60.9 points, or 0.76%
  • Listed Property Accumulation Index: 74,229.10, up 715 points or 0.97%
  • 90 Day Bank Bills: 4.13%, down 0.32%
  • AUD vs US Dollar: 62.47c, down 4.13c or 6.20%
  • UK FTSE 100: 8,582.81 points, up 416.05 points or 5.09%
  • Dow Jones Industrial Avg: 42,001.76 points, up 2,832.24 points or 7.23%

Guardian Investments Pty Ltd ABN 18 608 506 261 is a Corporate Authorised Representative of Guardian Associates Pty Ltd AFSL 238281. This page reproduces commentary published in March 2025 and is general advice only. It has not been tailored to your objectives, financial situation or needs, and the figures were current at the time of writing. Past performance is not a reliable guide to future returns. Seek personal financial advice before acting on it.