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Navigating the markets in volatile times
In a whirlwind six weeks, global equity markets have undergone one of their most volatile periods since the global financial crisis. At the heart of the turbulence lies the dramatic escalation—and partial retreat—of tariffs amid tense U.S.-China trade negotiations. Markets received a further boost this week with confirmation that the previously announced 145% tariff on certain Chinese imports had been cut back to 30%. This de-escalation, while not a permanent solution, helped ease investor nerves. The move – announced alongside a tentative trade agreement - triggered a sharp 4% rally in the NASDAQ, extending the broader market’s recovery.
Labour market resilience softens recession fears
Despite the trade policy chaos, some economic fundamentals have remained supportive. Most notably, the U.S. labour market continues to add jobs, helping to offset deeper correction risks. As a result, recent recession concerns have been dialled back, with markets appearing more confident that the worst-case scenario can be avoided—at least in the near term.
Impact on Australia: opportunities amid dislocation
For Australia, the direct impact of U.S. tariffs is relatively muted, with most exports tied to Asia. While a global slowdown could pose risks—especially via China—a situation could arise where Chinese stimulus activity may in fact support demand for key Australian commodities, offering a potential upside for domestic markets.
Sharp market movements have opened up selective investment opportunities. Companies like Pinnacle Investment Management Group Ltd, which experienced significant share price declines despite solid underlying fundamentals, drew interest from the Pie investment team. With a diversified earnings base across asset classes, Pinnacle became a case in point for those willing to lean into volatility and add to positions where long-term conviction remains strong.
Looking ahead: stay nimble
Markets have rebounded, but the environment remains unpredictable. Ongoing geopolitical shifts and policy uncertainty continue to fuel volatility. Preparing for further market swings—rather than positioning around a single outcome—remains a prudent strategy. A cautious, diversified approach continues to be the most effective way forward in navigating a landscape marked by uncertainty and unexpected catalysts.
If you have any questions, please feel free to reach out to the team.
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