Market update: 4 February 2025
Global markets faced turbulence this week as trade tensions weighed on investor sentiment, resulting in broad declines. While weeks like this can be concerning, it’s a reminder of the importance of staying diversified and consistent with your investment strategy. By spreading your investments across different sectors and regularly contributing through market ups and downs, you give yourself a better chance of achieving long-term success.
In Australia, the ASX 200 dropped 1.8%, with all 11 sectors finishing lower, with Healthcare (-2.3%) and Consumer Discretionary (-2.1%) hit the hardest. Energy (-0.5%) and Telco (-0.7%) held up relatively well. Meanwhile, gold and mining stocks were bright spots—Lynas (+3.6%), Ramelius Resources (+2.0%), and Regis Resources (+2.0%) led gains. On the downside, Fisher & Paykel fell 7.4% due to higher cost forecasts linked to the new U.S. tariffs, and Westgold slumped 12.4% after lowering its production guidance.
In Asia, markets saw steep declines but remained orderly as investors processed the newly announced tariffs. Hong Kong equities rebounded after early losses, as investors held on to hopes that tariffs might be used as leverage for future trade negotiations. Trading volumes in Hong Kong were light, while Mainland China remained closed for the Lunar New Year.
European markets also faced losses, with the Euro Stoxx 50 down 1.9% and the FTSE off 1.2%. Stocks in tariff-sensitive industries led declines as uncertainty surrounding trade policies continued to weigh on sentiment.
In the U.S., equity futures pointed to a weak open, with Dow futures down over 580 points and Nasdaq futures off nearly 390 points. However, some recovery occurred later in the session. The yield curve flattened as investors moved towards safety, with two-year Treasury yields rising 5bps to 4.24% and 10-year yields down 2bps to 4.52%.
While market movements can feel challenging, it’s important to keep a balanced perspective. Markets naturally go through cycles, and times of volatility often provide opportunities. Maintaining a long-term view, diversifying investments, and steadily contributing to your portfolio are strategies that can help you build resilience and navigate uncertain times.
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