Market Update – March 2025
Dear clients,
We would like to provide you with an update on recent market developments that may have an impact on your investments.
Market update as of March 2025
Australian Market
Inflation
Inflation has continued its downward trajectory, with the core trimmed-mean inflation rate decreasing to 2.4% in the fourth quarter of 2024, aligning with the Reserve Bank of Australia’s (RBA) target range of 2–3%. This decline indicates a moderation in inflationary pressures.
Interest Rates
In response to easing inflation, the RBA reduced the cash rate by 25 basis points to 4.1% in February 2025, marking the first rate cut since November 2020. The central bank remains cautious about further easing, emphasising that future decisions will be data dependent.
Equity Market
The Australian equity market, as measured by the S&P/ASX 200 Index, declined by 4.2%, closing at 8,172.4 points. This downturn was primarily influenced by escalating global trade tensions, notably the announcement of new U.S. tariffs on imports from Mexico, Canada, and China, which led to increased market volatility and investor uncertainty.
Economic Performance
Australia’s GDP growth is projected to recover from 1.4% to 1.75% in 2024–2025, with expectations to reach 2.25% in 2025–2026. This outlook is supported by a projected increase in household consumption growth and a stable labor market.
Labor Market
The unemployment rate has edged up slightly to 4.1% in January 2025, from 3.9% in November, primarily due to a record-high labour force participation rate. Despite this increase, the labor market remains strong, with significant job creation over the past year.
Currency Strength
The Australian dollar reached a 2025 high, trading at 0.63 USD, driven by robust employment data.
Whyhalla Steelworks $2.4 billion dollar government bailout
The Australian federal and South Australian governments announced a joint $2.4 billion rescue package for the Whyalla steelworks. This intervention followed the South Australian government’s decision to place the facility into administration due to financial instability under its owner, GFG Alliance. The bailout aims to ensure the steelworks’ continued operations, safeguard approximately 1,100 direct jobs, and facilitate a transition toward green steel production. Immediate funding includes $100 million for creditor payments and infrastructure upgrades, with an additional $1.9 billion allocated for long-term investments to modernise the plant and attract new ownership. The federal government is also considering taking an equity stake in the steelworks to encourage potential buyers and secure its future. This initiative underscores a broader strategy to decarbonise Australia’s steel industry and strengthen the nation’s industrial base.
US Market
Stock Market Performance
In March 2025, the U.S. stock market experienced declines across major indices, reversing January’s gains. The Dow Jones Industrial Average decreased by 1.6%, the S&P 500 fell by 1.4%, and the Nasdaq Composite declined by 4.0%. These downturns were primarily influenced by escalating trade tensions, particularly the announcement of new U.S. tariffs on imports from Canada, Mexico, and China, which heightened investor concerns about potential economic slowdowns. Additionally, a significant drop in consumer confidence contributed to market volatility, reflecting apprehensions regarding trade policies and their potential impact on the economy. In contrast to January’s gains, March’s performance underscores the market’s sensitivity to geopolitical developments and economic indicators.
Federal Reserve Policy
The Federal Reserve maintained interest rates at 4.5% during its January meeting. Chair Jerome Powell indicated a cautious approach, emphasising the need to assess the impact of recent policy changes, including tariffs and immigration restrictions, before considering further rate adjustments.
Economic Performance
The U.S. economy entered 2025 on firm footing, with GDP rising at a 2.3% annualised rate in the fourth quarter of 2024. Analysts project continued resilience in the U.S. economy despite higher borrowing costs.
Trade Policies
Investor anxiety over President Donald Trump’s tariff threats has intensified following the implementation of new tariffs on March 4, 2025. The U.S. imposed a 25% tariff on imports from Canada and Mexico, and a 20% tariff on Chinese goods. However, on March 6th 2025, President Trump signed an executive order granting a one-month reprieve from these tariffs for goods that comply with the 2020 USMCA free trade deal rules.
DOGE’s $5000 Dividend Cheque for American Households
President Donald Trump and advisor Elon Musk introduced the “DOGE Dividend,” a proposal to distribute 20% of savings from the Department of Government Efficiency (DOGE) directly to taxpayers. This initiative, suggested by investor James Fishback, aims to provide approximately $5,000 per taxpaying household if DOGE achieves its $2 trillion savings goal.
European Market
Economic Growth
The Eurozone economy experienced modest growth in the fourth quarter of 2024, with GDP increasing by 0.1% quarter-on-quarter, slightly above initial estimates. However, major economies like Germany and France faced contractions, while countries such as Portugal and Lithuania recorded robust growth.
Inflation and Monetary Policy
The Bank of England’s Monetary Policy Committee (MPC) reduced the Bank Rate by
0.25 percentage points to 4.5% in February 2025, with a majority vote of 7–2. However, Deputy Governor Sir Dave Ramsden highlighted increased risks of inflation exceeding the bank’s target, suggesting that future interest rate adjustments could be unpredictable, potentially being “very slow” or “very quick,” depending on economic developments.
Corporate Developments
Glencore, a Swiss-based mining and commodities trading firm, is considering relocating its primary stock market listing from London to another location, potentially New York, to achieve better valuation. This move reflects broader trends of companies reassessing their listings in response to changing market dynamics.
International Developments
Commodity Markets
Gold prices have reached a record high of $2,942.68 per ounce, driven by escalating geopolitical tensions and increased demand for safe-haven assets. Analysts anticipate that prices may soon surpass the $3,000 per ounce mark, with forecasts suggesting potential peaks as high as $3,200 to $3,500 within the year.
Geopolitical Investments
In response to a slowing Chinese economy, Japan has increased its investments in Australia’s mining sector. Notably, Mitsui Corporation has made an $8.4 billion investment in the Rhodes Ridge iron ore project, ensuring long-term resource supply and strengthening economic ties between Australia and Japan.
Advice Warnings & Disclaimers.
This information is intended to provide general information only and has been prepared without considering any particular person’s objectives, financial situation or needs. Any general advice contained within or given during this presentation (whether orally or in writing) does not consider your objectives, financial situation or needs. Nothing in this presentation is intended to be investment, financial advice or a recommendation to invest in a financial product. Before acting on such information, you should consider the appropriateness of the information having regard to your personal objectives, financial situation or needs. To the maximum extent permitted by law, we (Forward Path Advisory Pty Ltd), Joel Cleary & Rathakrishna Jeyabalasingam (Rads Je) disclaim all liability and responsibility for any direct or indirect loss or damage which may be suffered as a result of relying on anything in this podcast, including any forward-looking statements. Past performance is not an indication of future performance. In particular, you should obtain professional advice before acting on the information contained in this presentation.
