Global Markets
The Dow rose 0.55%, the S&P 500 gained 0.9%, and the Nasdaq was up 1.1% for the week, with both indices closing at fresh all time highs. April capped what turned out to be the best month for US equities in years. The Nasdaq rose 15.3%, its strongest monthly performance since April 2020, while the S&P 500 gained 10.4%, its best month since November 2020, staging one of the fastest recoveries on record from a correction low.
The primary driver was a strong corporate earnings season. Alphabet and AWS reported revenue growth of 22% and 28% respectively, Apple delivered iPhone 17 growth of 22%, and both Meta and Microsoft signalled continued investment in AI infrastructure. Analysts are now tracking S&P 500 first quarter earnings growth at 27.8%, the fastest pace since Q4 2021.
Economic data released during the week introduced some caution. US consumer spending decelerated in Q1 and the personal savings rate declined, suggesting households may be drawing on savings to maintain spending levels. Oil remains above $100 per barrel as regional geopolitical tensions persist. Despite this, markets have broadly chosen to focus on the earnings picture rather than the geopolitical backdrop. The US Federal Reserve held its policy rate steady at its midweek meeting, in line with market expectations, with no change to its forward guidance.
Australian Markets and ASX 200
The ASX 200 closed the week at 8,729, up 0.74% on Friday, recovering from an eight session losing streak that was the longest since 2018. The index reached a three week low of 8,693 on Tuesday before stabilising, with BHP, Rio Tinto, and Fortescue leading the recovery alongside gold sector names.
The key domestic development during the week was Wednesday’s inflation release. Australia’s Q1 CPI came in at 4.09% annually, the highest reading in more than two years. The March monthly figure surged to 4.6%, driven primarily by fuel prices, with unleaded petrol rising 33% and diesel jumping 41% in a single month. These were the largest monthly moves in those categories since records began in 2017.
The trimmed mean, the Reserve Bank of Australia’s preferred measure of underlying inflation, held at 3.3% annually, unchanged from the prior quarter. This was slightly less elevated than some had anticipated and caused hike probability expectations to ease from above 75% to around 70% in the immediate aftermath of the release. However, housing costs rose 6.5% annually, transport costs increased 8.9%, and food prices rose 3.1%, all running above the RBA’s 2 to 3% target band, indicating the inflationary pressures may be broadening beyond the fuel category.
Market pricing as at the close of the week indicated an 86% probability of a 25 basis point rate increase at Tuesday’s RBA board meeting, which would bring the cash rate to 4.35% and represent the third consecutive increase in 2026. A 50 basis point increase was also considered a live possibility, priced at approximately 15%. Readers should note that implied market probabilities are not a reliable indicator of actual outcomes, and interest rate decisions involve a high degree of uncertainty. The AUD/USD rate was near 0.7208 at the close of the week.
A Message From Our Founder
One of the more notable themes of recent weeks has been the divergence between US and Australian equities. While Wall Street has reached new all time highs on the back of a strong earnings season and renewed enthusiasm around AI driven corporate investment, the ASX has been working through its longest losing streak in years, facing headwinds from elevated energy costs, rising interest rates, and pressure on household spending.
The two markets are reflecting genuinely different economic conditions. In the United States, corporate earnings are growing at close to 28%, the Federal Reserve is holding its policy rate steady, and equity markets are focused on the earnings outlook. In Australia, the economy is heading into what would be a third consecutive RBA rate increase, inflation has not yet returned to target, and the direct impact of sustained high energy prices is more acutely felt given Australia’s lower degree of domestic energy independence relative to the United States.
A stronger Australian dollar, supported by the interest rate differential, further affects the relative attractiveness of local versus international assets from the perspective of Australian based investors.
Taken together, these factors inform our current portfolio positioning. We hold an overweight allocation to US equities and an underweight allocation to Australian equities. This view is grounded in observable macroeconomic conditions as they stand today, and we will continue to assess it as new data becomes available. This does not constitute a recommendation for any individual investor, and positioning decisions should always reflect personal circumstances, risk tolerance, and investment objectives.
For ongoing market insights and portfolio commentary, visit the Barker Wealth market updates page.
Disclaimer: This commentary is intended for general information only and does not constitute personal financial advice. You should consider your own objectives, financial situation and needs before making any investment decisions. Barker Financial Pty Ltd ABN 62 675 838 605, trading as Barker Wealth, is a Corporate Authorised Representative (CAR) 1317193 of AFSL Holdings Australia Pty Ltd ABN 75 165 392 889, AFSL 460940.