The share market returned (+3.6%) for the month of April, outperforming most global markets. It was a volatile month which started with the US president announcing ‘Liberation Day’ tariffs and crashing share markets around the world. The Australian share market fell (-8.6%) after the announcement, and then rallied (+13.3%) off the low point. April produced both the biggest one day loss and the biggest one day gain in the past 5 years.
The Telecommunications sector was up (+6.5%), the IT sector (+6.3%) and Banks (+5.8%). Energy was the worst performer, down (-7.7%) after the Oil price hit its lowest point since March 2021.
One company still going well is the Commonwealth Bank, it finished April up (+9.1%). The CBA is almost worth as much as Westpac, NAB and ANZ combined. That is despite 10 major stockbrokers currently rating the bank as a ‘Sell’, and the dividend being only 2.8% before franking.
The world share index finished down (-1.7%) for the month. The US share market lost (-0.8%), the UK (-1.0%), France (-2.5%), China (-1.7%), while Germany was up (+1.5%) and Japan (+1.2%). The US share market was all over the place in April. It recorded its worst 2 day performance since the Covid pandemic, then managed to record its best day since the Global Financial Crisis in 2008. In 25 days, it went from being down (-15.1%) for the year into positive territory.
House prices climbed (+0.3%) in April with Sydney and Melbourne both lifting by (+0.2%). Despite the positive start for the housing market this year only Brisbane, Adelaide and Perth are at record high points. Melbourne remains (-5.4%) lower than its peak. Not hard to see why housing was such a big election issue with data from Core Logic showing the portion of dwellings valued at $1 million or more has risen from 9.7% in April 2015 to 34.4% as of April 2025.
The Australian dollar climbed (+2.5%) against the US dollar for the month, making the US a more affordable holiday destination at a time no one wants to go. The annual inflation rate was steady at 2.4%, as was the unemployment rate at 4.1%.
The Iron Ore price fell (-6.8%), Oil (-16.8%) while Gold (+5.6%) and Bitcoin (+10.6%) both benefited from the global chaos.
Where are we now
After cutting interest rates on Tuesday last week, the Reserve Bank Governor, Michele Bullock described the current economic environment as not just uncertain, but also unpredictable. She referenced the trade war, geopolitical tensions, and a decline in global growth. Investors decided to ignore all that, and the share market finished up strongly for the day.
Her caution is not unfounded, the Australian share market is just 3% lower than the high point it reached in February this year, but the numbers don’t seem to justify it. The dividend yield is currently 3.5% which is well below the long term average of 4.1%, and the price to earnings ratio is 26% higher than the historical average. The US share market is 5.6% lower than its record and looks even more expensive than Australia.
Just because something is historically expensive doesn’t mean it won’t continue to go up in value. The CBA is a great example of a company that has been expensive on most financial measures for the past 18 months, but in that time it has gone up (+75%) in value.
Broadly speaking the outlook is still positive, but in the current environment where investment returns depend more on politics than economics, anything can happen.
