Continued economic uncertainty and market volatility are being driven by a combination of Trump's political agenda, the United States' escalating trade war with China, and the upcoming Australian Federal Election.
Recent statements from Trump suggest a reconsideration of the proposed tariffs on Chinese imports, indicating a potential de-escalation of the trade war. The S&P/ASX 200 Index and the Australian dollar showed positive reactions to these developments. Uncertainty still clouds the rate of de-escalation between the world’s two largest economies and where exactly the tariff rate will land.
Despite the shift in tariffs, the International Monetary Fund (IMF) has released updated global economic projections, revising down their global growth expectations. Global growth trajectory is now expected to decline due to a prolonged period of “unprecedented shocks.” The IMF’s World Economic Outlook report forecasts the Australian economy to grow at 1.6% in 2025, a reduction from the 2.1% projected in January. This weakened growth outlook is attributed to heightened global uncertainty, driven by rapidly changing policy positions, trade tensions, financial market adjustments, and deteriorating sentiment.
Domestically, the looming federal election is prompting caution, with many delaying decisions until the political landscape becomes clearer. The latest NAB Business Survey indicates that business confidence remains subdued, leading businesses to proceed cautiously. Global trade tensions could have significant flow-on effects for Australian businesses, including disruptions to supply and demand as well as inflationary pressures. Voters are closely observing how each party plans to manage the economy.
With trade tensions shaping the global outlook and exerting upward pressure on inflation, next week’s CPI figures will be closely monitored, particularly by the RBA as it prepares for its May monetary policy decision. While money markets and the Big 4 Banks anticipate a reduction in the cash rate in May, recent rallies in the S&P/ASX 200 Index may offer the RBA some flexibility for future rate adjustments.
Overall, the rapidly evolving economic and political landscape continues to drive market volatility and caution among Australian businesses.
Disclaimer: This is provided for information and general news purposes only and does not constitute any offer or any such invitation of any sort or in any jurisdiction. You should not construe any such information or any material as legal, tax, investment, financial, or other advice. The views and opinions expressed in this material are those of the author as of the date indicated and any such views are subject to change at any time based upon market or other conditions. The information may contain certain statements deemed to be forward-looking statements, including statements that address results or developments that Aura expects or anticipates may occur in the future. Any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected in the forward-looking statements.
Any financial product advice given is of a general nature only. The information has been provided without taking into account the investment objectives, financial situation or needs of any particular investor. Therefore, before acting on the information contained in this report you should seek professional advice and consider whether the information is appropriate in light of your objectives, financial situation and needs.
Aura Credit Holdings Pty Ltd (ACN 656 261 200) (ACH) operates as a Corporate Authorised Representative (CAR 1297296) of Aura Capital Pty Ltd (ACN 143 700 887 | AFSL 366230). However, where information provided by Brett Craig, Portfolio Manager of the Fund, consists of General Advice, this is provided as an Authorised Representative (AR No. 001298683) of Montgomery Investment Management Pty Ltd (ACN 139 161 701| AFSL 354564).
This information is distributed in Singapore by Aura Group (Singapore) Pte Ltd (Registration No. 201537140R) which is regulated by the Monetary Authority of Singapore as a holder of a Capital Markets Services License. View our Privacy Policy here.