April In Review: ASX Becomes Tariff Safe Haven

This story features COMMONWEALTH BANK OF AUSTRALIA, and other companies. For more info SHARE ANALYSIS: CBA

The month of April was a roller coaster ride of selling on tariff concerns, followed by a record rally on short covering. Things aren’t so bad, for now! 

-ASX200 rallies 10.7% to a positive 3.6% return in April
-Trump pivot saves markets from abyss in April
-What was out of fashion in March shifted back in over April
-Commodties in the recessionary fears dog house
-Are earnings growth prospects for FY26 too high?

By Danielle Ecuyer

April’s risk-off and risk-on events

April was the month when investors called into question the US exceptionalism theme post the April 2 Liberation Day announcements that sent markets into an overdrive of selling due to the ferocity of the proposed reciprocal US tariff imposts. A significant spike up in volatility from March was triggered.

The “sell America” narrative took down US, global equity markets and the US dollar at the start of the month, with the US Treasury market turning the tables on its traditional “safe” haven status. The 10-year US Treasury yield rose to 4.493% on April 11 from a low of 3.99% on April 4.

The speed and magnitude of the sell-off resulted in a seven-day, 50bps backup in yield, which caused tremendous dislocation in financial markets as volatility spiked.

While commentators were quick to assume the rest of the world had decided to sell US assets, the generally accepted view has coalesced around hedge funds getting caught off guard by higher levels of market volatility and subsequently having to unwind Treasury trades as margin calls came in.

Modern day intensely leveraged and financialised markets operate properly and reliably until volatility rears its head and margin calls come knocking, triggering forced selling of assets.

There was also some evidence of Japanese selling of US Treasuries, albeit nothing anywhere near the panic commentary around the demise of the US dollar.

With risk-off pressures building in markets and investors powering into gold, the shiny metal rose 6.4% in April, bringing the year-to-date rise to 26.68% at US$3,327.65 by month-end, and an intermediate all-time high over US$3,500/oz.

Cooler heads in the White House prevailed

The Trump pivot came on April 9, just seven days after the initial reciprocal tariff announcements, with the S&P500 reaching its lowest level on April 7, down -23% from the recent highs, including a fall of -11.4% at the start of the month.

Treasury Secretary Scott Bessent and Secretary of Commerce Howard Lutnick reportedly jumped on the opportunity to speak with President Trump in the Oval Office when tariff champion and trade hawk, Trade Secretary Peter Navarro, was out of the building attending a meeting.

Apparently, Bessent and Lutnick refused to leave until President Trump had posted on Truth Social a 90-day reprieve on reciprocal tariffs.

The ASX200 reached its lowest point of the month on April 7, falling -6.5% on the day, representing the index’s lowest level since December 2023.

April turned the tables on 2025 negativity

Trump blinked and markets said thank you, what a relief! Thus commenced the April recovery rally.

Following the ASX200 experiencing a negative total return of -3.8% in February and -3.4% in March, the ASX200 total return came in at a positive 3.6% in April, post an intra month rally off the lows of 10.7%. This strong (out)performance compares to the S&P500 total return falling short by -0.7% over the month.

Ranked in order of strength, banks were the flavour of the month, with the sector rallying 7.1%. Commonwealth Bank ((CBA)) shares did the heavy lifting and topped $169, with Bank of Queensland ((BOQ)) the best performer after reporting better-than-expected earnings.

Communication services and consumer discretionary advanced 6.47% and 6.06%, respectively, telling two different tales.

Telcos are shaping up as safe defensive positions, with Telstra Group ((TLS)) shares well bid, while the prospect of RBA rate cuts starting in May had investors buying discretionary stocks, including AP Eagers ((APE)), Bapcor ((BAP)) and JB Hi-Fi ((JBH)), as well as REA Group ((REA)) and Car Group ((CAR)) which had been sold down in March.

Technology stocks, having been dumped like the proverbial hot potatoes in the weeks prior, were back rallying in April, the sector ending up 6.65%, but still retaining a near -7% deficit year-to-date.

The likes of WiseTech Global ((WTC)) and Pro Medicus ((PME)) made strong comebacks, and Growth outperformed Value with a 5.3% rise versus 2.6%, as momentum shifted back into favour.

Macquarie notes both large caps in Australia and the US outperformed by around 2% in April.

Both better-than-expected and better-than-feared earnings from US technology companies, including ongoing spending on artificial intelligence, turned around the February/March fears over declining AI investment and Deep Seek-related concerns.

Scooped up in the improving sentiment on AI, Goodman Group ((GMG)) shares rallied along with other REITs on expectations of lower interest rates and an improvement in housing developments. Mirvac Group ((MGR)) was well bid.

Gold stocks continued to advance, with the sector rising 5.17% and taking the year-to-date return to 37.10% (on average).

Look no further to understand how the world is looking at risk in 2025.

Prospects of slowing global growth hits commodities

The growing fears around macro-economic impacts of tariffs as trade between the US and China grinds to a halt could be seen in the commodities trade.

While investors bottom-fished in the more interest rate-sensitive and risk-on technology sectors, rising concerns over macro-economic impacts on growth saw the copper price fall -5.69%, aluminium -2.47%, nickel -4.05%, and iron ore off by -3.77%.

Shares in South32 ((S32)) and Pilbara Minerals ((PLS)) experienced heavy selling pressures, while Lynas Rare Earths ((LYC)) crowned itself a top performer with China placing export controls on rare earths.

The price of Brent oil fell -13.48% in April to US$62.95/bbl, and the energy sector on the ASX declined -7.72%, bringing the year-to-date fall to -15%. Unsurprisingly, Woodside Energy ((WDS)) and Beach Energy ((BPT)) shares joined the bourse’s biggest losers.

Despite weakness in the price of iron ore, the materials sector ended broadly flat.

A rally in the uranium price towards month-end squeezed short sellers, alongside some positive news from Boss Energy ((BOE)) and Paladin Energy ((PDN)), which saw both stocks as standout performers in April compared to being at the bottom of the losing tables in March.

No major changes to earnings growth for FY25

In terms of EPS revisions over the month, ASX50 stocks BlueScope Steel ((BSL)), Sigma Healthcare ((SIG)), Coles Group ((COL)), and ResMed ((RMD)) enjoyed the most positive upward revisions throughout the month.

The likes of Woolworths Group ((WOW)), WiseTech Global ((WTC)), BHP Group ((BHP)) and Aristocrat Leisure ((ALL)) were relegated to the least positive EPS revisions inside the ASX50.

Analysis by Macquarie highlighted the FY25 EPS growth forecast from a bottom-up approach remained flat in April, with a forecast average decline of -2.8% for FY25. The current financial year thus represents the third year of general EPS decline in a row, but Macquarie isn’t sad or surprised about it as this has been the broker’s expectation for the past six months.

Macquarie has lowered its average FY26 EPS forecast by -1.6ppt to 5.1% growth in April, with resource stocks the main drag (declines of -4.8ppts), while industrials are forecast to grow EPS by 11% in FY26. The latter, the broker acknowledges, may prove to be too optimistic given the prospect of slowing global growth.

Colleagues at Morgan Stanley observed earnings forecasts for April in aggregate declined by -0.9%, -2.4% and -1.7% for FY25-FY27. Consensus earnings growth forecasts sit at -1.2% for FY25, followed by a positive 6.2% for FY26 and 7.6% for FY27.

Accounting for the changes in earnings outlook and the rise in share prices, the mutliple on the market rose by one PER point higher in April to 17.8x on a 12-month basis.

The Australian share market was a standout performer in April, with the DAX30 and Nikkei 225 rising 1.5% and 1.2%, respectively, and with the FTSE100 ending down -1.02%, the Hang Seng off by -4.3%, and the Dow Jones Industrial Average off by -3.17%.

The Nasdaq recovered much of the March sell-off and ended slightly up at 0.85%.

ASX100 Best and Worst Performers of the month (in %)

ASX200 Best and Worst Performers of the month (in %)

ASX300 Best and Worst Performers of the month (in %)

ALL-TECH Best and Worst Performers of the month (in %)

All index data are ex dividends. Commodities are in USD.

Australia & NZ

The World

Metals & Minerals

Energy

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms