Investment market update April 2025

Short-term market moves can tempt emotional decisions, but your super is designed to ride out volatility. Sudden investment switches now could lock in losses when the market swings back up. Find out more from ESSSuper's Chief Investment Officer.

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This investment commentary does not constitute advice.

Before acting on any advice contained in this article, podcast or video, please download and read the relevant Product Disclosure Statement and target market determination, found on our PDS and handbooks web page. The Board recommends that you seek financial advice before acting upon this information.

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Transcript

Transcript 

00:00:02 

You're listening to Exploring Super, the exclusive podcast for ESS Super members. 

00:00:11 

Welcome to a special edition of our Exploring Super podcast. 

00:00:15 

I'm Christian Kueng, Manager of Member Education. 

00:00:18 

And today I'm joined by ESS Super's Chief Investment Officer, Daniel Sellioutine 

00:00:22 

Before I hand over to Daniel, I'd like to reassure members that super is a long-term investment. 

00:00:28 

and making sudden or frequent changes to your investments may actually work against you. 

00:00:32 

It's natural to feel uneasy when markets fall, but switching investment options when markets are down can mean selling low and losing the chance to recover. 

00:00:41 

Daniel, thanks for joining us. 

00:00:42 

It's a pleasure. 

00:00:43 

Can you tell us more about what's been happening in the investment markets recently and what that means for our members? 

00:00:48 

There's been a bit of noise in global markets recently, particularly off the back of some big announcements out of the United States. 

00:00:55 

So I wanted to take a few minutes to unpack what's going on, what it means for your super and how our investment strategy here is already built to handle situations like this. 

00:01:05 

On the 2nd of April, US President Donald Trump announced a blanket 10% tariff on all imports into the United States. 

00:01:13 

That takes effect on the 5th of April. 

00:01:15 

Unsurprisingly, markets didn't take kindly to this news. 

00:01:19 

The very next day, the S&P 500 fell nearly 5%, the NASDAQ dropped 6%. 

00:01:25 

and the Dow Jones was down by around 4%. 

00:01:29 

Bond yields moved lower as investors sought out safe haven assets. 

00:01:33 

That's typical in times of uncertainty, we call it a flight to quality. 

00:01:37 

Although as of the 10th of April, bonds are back to where they were. 

00:01:41 

and the S&B 500 has rallied in excess of 9% in a single session overnight. 

00:01:47 

Interestingly, credit markets have been fairly stable. 

00:01:50 

Spreads have widened slightly, but they're still well below long-term averages. 

00:01:56 

Infrastructure and property prices have also been stable, and that's a sign that long-term asset classes can help to buffer short-term volatility. 

00:02:06 

The Australian dollar has dipped against most global currencies, which has actually softened the impact of overseas declines on your investments here. 

00:02:15 

There is ongoing debate among economists and investors about whether Trump's tariffs will reduce the US trade deficit. 

00:02:23 

While tariffs are designed to make foreign goods more expensive and in turn encourage domestic production, they also result in higher consumer costs without necessarily increasing exports. 

00:02:35 

A more significant issue impacting the trade deficit is the US fiscal deficit, which is to say the US government spends more than it earns from tax receipts and that leads to borrowing from foreign countries. 

00:02:49 

This is a complex matter involving international monetary 

00:02:53 

accounting. 

00:02:54 

But in very simple terms, even if the US improves its trade terms with other countries, we may find that the trade deficit remains if fiscal spending isn't restrained also. 

00:03:04 

We also sense there may be some geopolitical factors involved. 

00:03:08 

The US trades relatively little compared to China, which has a far broader trading network with many countries. 

00:03:16 

The two countries I've just mentioned are in a difficult phase in their relations, which complicates 

00:03:22 

our analysis because there may be more at play than pure profit considerations driving decision-making. 

00:03:29 

So what does all this mean for Australia? 

00:03:31 

Well, the direct impact of these new tariffs is expected to be relatively modest for us, according to many economists. 

00:03:38 

US doesn't make up a large share of Australian exports. 

00:03:41 

That said, the uncertainty could weigh on global growth, especially if countries like China feel the pinch. 

00:03:47 

And that might complicate decisions for the Reserve Bank of Australia as they consider interest rate policy going forward. 

00:03:54 

But let me be clear, much of this has not come as a complete surprise to us. 

00:03:59 

Markets. 

00:04:01 

Correcting after two very, very strong years is not unusual. 

00:04:04 

Our investment strategy already allows for periods of volatility. 

00:04:09 

We know markets can move sharply on headlines like these. 

00:04:12 

We also know that trying to react to every short-term movement often does more harm than good. 

00:04:17 

And that's why we focus on long-term fundamentals. 

00:04:20 

And for you, as an ESS Super member, that's the most important message today. 

00:04:26 

Super is designed to be a long-term investment. 

00:04:29 

one that supports you throughout retirement. 

00:04:32 

Yes, markets will go up and down, but staying the course and resisting the urge to make knee-jerk reactions can lead to stronger outcomes over time. 

00:04:41 

Our accumulation plan, for example, is already designed to respond to changes in market conditions. 

00:04:46 

We actively adjust asset allocations as needed so that our members don't have to. 

00:04:51 

There's also a bit of silver lining in all this. 

00:04:54 

Despite the negative sentiment around tariffs, there's optimism around potential tax cuts and deregulation in the United States. 

00:05:03 

And central banks globally are generally easing monetary policy, so that could help support markets in the months ahead. 

00:05:10 

Without seeking to predict the future longer term, supply chains do inevitably adjust to tariffs. 

00:05:16 

Companies and countries do find new export markets for their products and services. 

00:05:22 

There will, of course, be losers and winners, but the world, as well as your investment in the accumulation plan, will go on. 

00:05:28 

So stay calm, stay informed, and stay focused on the longer term. 

00:05:32 

Well, thank you very much for coming in today and sharing your insights, as always. 

00:05:36 

We look forward to having you on again very soon. 

00:05:38 

Thanks very much. 

00:05:39 

Well, that wraps up our episode today of Exploring Super, the exclusive podcast for ESS Super members. 

00:05:45 

We look forward to producing more content for you at ESS Super, proudly serving our members. 

00:05:50 

If you'd like more information about our investments and products, please go to essuper.com.au. 

00:05:58 

This podcast is of a general nature only and does not consider your personal circumstances, financial needs or objectives. 

00:06:07 

Before acting on any advice contained in this podcast, please download and read the relevant product disclosure statements and target market determinations found on our website at essuper.com.au. 

00:06:20 

The board recommends that you seek financial advice before acting upon this information. 

00:06:25 

Investment returns cannot be guaranteed as investment markets can be volatile. 

00:06:30 

As A consequence, returns can be positive or negative. 

00:06:34 

Past investment performance is not a reliable indicator of future performance. 

00:06:38 

Benefits in ESS Super's accumulation plan, income streams and beneficiary account products are not guaranteed or underwritten by the Victorian Government or ESS Super. 

00:06:49 

Any institutions mentioned by name does not constitute endorsement.