FNArena’s Weekly Insights – April 07 2025
In this week’s Weekly Insights:
By Rudi Filapek-Vandyck, Editor
Share Market Scenarios & Dilemmas
Monday’s session on the ASX was expected to be brutal as the US administration shows no signs of backing down from its “reciprocal” import tariffs (note the ” “).
China’s response has been equally forceful, while the European Union seems in no mood to acquiesce either.
Just as the local market was seemingly on the brink of breaking down, capitulating maybe, buy orders started coming in, just like in the old John Wayne movies.
All of a sudden, stocks that were down -10% and more reduced their losses and some –like WiseTech Global ((WTC)) and Car Group ((CAR))– even brought some green back on the market’s screen.
At its low point around 11am, with forced selling and margin calls hitting the market hard, the ASX200 was down nearly -7%, which would mirror the type of days experienced during the covid crisis in 2020. By the closing bell, those losses had been reduced to -4.23%, still the heaviest one-day loss since 2020.
Is this it? Has the local share market now seen its low for the year?
That would be an incredibly bold prediction to make. But we won’t know until we look back with hindsight at some stage later in the year.
What we do know is the US administration is willing to gamble the US economy on getting a “better deal” from the rest of the world and this involves “pain now” for gains later.
I think there are, roughly assessed, three key reasons as to why markets have responded with extreme moves following the April 2 tariff announcements:
-Firstly, the tariffs itself are seemingly put together by a group of mad men, based on illogical calculations, covered by spurious spin and explanations. They don’t seem to offer, at face value, a lot of room to negotiate. Unless one believes this is Trump’s Art of the Deal strategy whereby the first gambit is to go overboard in order to confuse and bedazzle the opposition.
The good news is if this is the strategy, there’s a lot of wiggle room.……….
