We believe it is important to update our clients about the current market volatility.

Over the past month, both the Australian and US share markets have experienced declines.

Here are some key points:

• Australian shares have decreased by 8% in the past month but are still up by 1% over the past year.
  • Australian companies have paid out 2% in dividends this month – so that is part of the fall – because they paid cash dividends out to investors.
• The Dow Jones has fallen by 7% in the past month but remains up by 7% over the past year.
• The Nasdaq has dropped by 11% in the past month but is still up by 9% over the past year.

While recent news reports focus on market declines, it is important to note that these are merely corrections from the record highs achieved in recent months. Volatility is an inherent part of equity markets, and it is crucial to manage exposure levels to ensure they remain within agreed parameters.

As the above graph shows, there are always more good years than poor years – but it’s the falls that grab the headlines and our attention.

Currently, there is significant market reaction to developments from within the Oval Office. For example, a social media post about tariffs being on/off is cause market fluctuations in both directions. Additionally, geopolitical events, such as the situation in Ukraine with each of the players exerting their power/influence, also impacting market sentiment.

Notably, Trump’s tariffs on Mexico and Canada were introduced as a blunt means to address issues such as illegal immigration and Fentanyl. These tariffs were paused once negotiations began for these countries to do more to cease cross boarder smuggling – which is ultimately what Trump was seeking.

There is also ongoing discussion about the possibility of a US recession. While it is uncertain whether the US will enter a recession (and it doesn’t help America/Trump if that were to occur), it is clear that he is happy to use that threat as a strategic tool to negotiate better deals for the US.

Will these measures push allies away from the US and perhaps closer to China – maybe. Will there be a shift in global focus being out of the US and to other parts of the world – probably.

Our personal opinions on political figures are one thing, but history will ultimately judge their actions. It is clear that certain policies, such as “America First” and aggressive deal-making, have significant consequences for global markets when a disrupter comes along.

Despite the volatility, it is important to remain focused on long-term investment strategies. This does not mean diving into cash, as opportunities still exist for long-term investors. Active management can help mitigate downside risks by adjusting investments based on market conditions.

Internally, we continuously reassess the investments we recommend to clients as part of our Investment Committee’s portfolio management approach. If you would like to discuss this further, please do not hesitate to reach out to Josh, Paul, or myself.

Kind Regards,

Anthony Sinclair – Director

Authorised Representative of Count Financial Ltd

asinclair@gnsgroup.com.au

www.gnsgroup.com.au

Ph 03 9499 7444

PO Box 479  IVANHOE  VIC  3079

7 / 50 Upper Heidelberg Road Ivanhoe   VIC   3079

Source: All Ordinaries Accumulation Index. Original concept by AXA