What a month it has been! As we close out April, global markets are down approximately 1.5%, but that modest figure masks a turbulent journey filled with tariff shocks, trade war threats, and major political drama.

*Source: Factset: Kōura returns are pre-tax and post-fees. Returns over 12 months are annualised. Local market returns use the relevant markets indices; NZ Equities uses NZX50 index; US Equities uses S&P500 index; Rest of World uses MSCI EAFE Index; Emerging Markets uses MSCI Emerging Markets Index, Fixed Interest uses Bloomberg Aggregate NZ Composite Bond Index. Bitcoin return is the USD change in price of Bitcoin. The return for an Aggressive Portfolio represents the equivalent of 95% growth and 5% income assets investing in core Kōura Funds. The return for a Growth Portfolio represents the equivalent of 80% growth and 20% income assets by investing in core Kōura Funds. Returns are calculated by Kōura.

*Past performance is not a reliable indicator of future performance. Returns are not guaranteed, and investment values may fluctuate over time.

A Rocky Start to April

Investor nerves were already frayed heading into April, but the real chaos began on April 2nd, when President Trump announced a 10% global tariff alongside even higher tariffs for major trade partners. The announcement relied on questionable math to justify so-called "reciprocal tariffs," causing widespread panic.

The market reaction was swift and brutal:

• Equity markets plunged nearly 10% in the week following the announcement.
• Bond yields spiked 0.5% within a week.

It felt less like a routine correction and more like an "obliteration day", rather than Trumps stated Liberation Day. Thankfully, the initial panic was short-lived.

Trump Wavers, Markets Rebound

True to form, Trump reversed course when faced with market turmoil. The broad global tariffs were paused, and the trade war focus narrowed to China specifically. However, the damage to market sentiment was already done.

Shortly after Easter, another shockwave hit when Trump threatened to fire Federal Reserve Chair Jerome Powell unless interest rates were lowered quickly. This unprecedented move threatened the bedrock principle of Central Bank Independence - vital for healthy, unbiased economic policy. (A timely reminder, especially given local echoes here with Nicola Willis's current pressure on the Reserve Bank of New Zealand.)

Markets panicked yet again, but Trump quickly backed down, restoring some calm.

By the End of April: Some Recovery, Lingering Wounds

As the month closed, bond yields have largely reverted to their starting points, and markets are only a few points down from where they began. However, the underlying economic fundamentals have taken a real hit.

• Tariff Rates: Even the most optimistic economists now believe the average US tariff rate will remain above 20%, compared to 2.5% just a year ago.
• Growth Projections: Global growth forecasts have been slashed. Initial estimates of 2% growth by year-end are now revised down to a dismal 0.5%
• Investment Freeze: Corporate investment plans are on hold. In an environment where trade rules change overnight, long-term projects are simply too risky.

In short, the global economy is set to slow significantly, and the big question is "by how much?"

Winners and Losers

The uncertainty has shaken confidence in the US dollar, driving a significant sell-off. Meanwhile, "safe haven" assets have surged:

• Gold prices have climbed.
• Bitcoin appears to be emerging as a "safe have" asset, gain traction amidst the chaos, but it remains early days with confirmation yet to be seen in longer-term data.

What This Means for New Zealand

The direct impact on New Zealand remains uncertain. A slowing global economy will inevitably hurt our export-driven economy. Two major risks loom:

1. A Slowing China: As our largets trading partner, any significant Chinese slowdown will have serious knock-on effects here.
2. Geopolitical Pressures: We could face pressure to "choose sides" between the US and China - something we have skilfully avoided for the past 30 years. However, where there are threats, there are also opportunities. Trade reshuffles could open new markets for Kiwi exporters willing to adapt.

KiwiSaver and Your Investments

KiwiSaver account balances will likely be down this month, reflecting the 1.5% market dip and a 10% strengthening of the New Zealand Dollar — which further drags on offshore investment returns.

But remember:

• Investing is a long-term game.
• Short-term volatility presents opportunities for disciplined investors. Stay the course, and don't let temporary turbulence derail your investment journey.

Final Thoughts

Brace yourselves, we're less than 100 days into the Trump term, with over 1,400 days still ahead at this point! While global markets will remain volatile, resilience, diversification, and a long-term perspective will help you weather the storm.

Stay informed and stay invested - we'll keep you updated as the situation evolves.

Disclaimers:

*The views and opinions in this article are those of Rupert Carlyon. This content is for informational purposes and should not be considered financial advice. Before making any financial decisions, consider consulting a financial adviser. 

*Kōura Wealth Limited is the issuer and manager of the Kōura KiwiSaver Scheme. A copy of the Product Disclosure Statement is available at kourawealth.co.nz/documents 

*Bitcoin is highly volatile and not suitable for all investors. Before investing part of your KiwiSaver balance in the Bitcoin fund, ensure you fully understand the risks associated with cryptocurrencies: https://shorturl.at/U6Mkp. and/or consider seeking financial advice.