Global Markets
The S&P 500 gained 0.4% for the week to close at 7,473, extending its winning streak to eight consecutive weeks, the longest since December 2023, while the Dow Jones added 294 points to reach an intraday record high and the Nasdaq rose 0.2%, securing its seventh weekly advance in eight weeks. Gains on Friday were led by Merck, Salesforce, and Cisco, with the week’s advance reflecting continued resilience in corporate earnings and cautious optimism around the geopolitical situation.
The Iran situation remained the central market driver. Secretary of State Marco Rubio noted progress toward a deal, while Iran’s foreign ministry cautioned that differences between the two sides remained deep, leaving oil hovering near $100 per barrel. The prolonged uncertainty around the Strait of Hormuz continues to weigh on energy markets and household budgets globally.
Beneath the surface, market leadership remains narrow and the consumer picture continues to show signs of pressure. The New York Fed’s research confirmed a K-shaped divide widening, with lower-income households cutting fuel consumption sharply while higher earners barely adjusted their behaviour. JPMorgan CEO Jamie Dimon has publicly noted that the combination of rising oil prices and persistent inflation shares characteristics with conditions that preceded the recessions of 1974 and 1982, and has flagged a stagflationary scenario as worth monitoring should the Strait of Hormuz disruption persist. The Fed remains on hold, with markets currently pricing in no rate cuts until late 2026 at the earliest.
Australian Markets and ASX 200
The ASX 200 rose 35 points, or 0.4%, to close at 8,657 on Friday, extending gains for a second straight session and logging a modest 0.3% weekly gain after sharp losses in the prior period. Two significant domestic events shaped the week.
The Federal Budget landed Tuesday night, with CGT changes that had been widely anticipated by markets confirmed. The 50% capital gains tax discount on long-term assets was replaced with a 30% minimum effective rate floor, a material change to the treatment of capital gains for many investors. Negative gearing deductions on established residential properties will also be disallowed from July 2027. We encourage all clients to speak directly with their adviser regarding how these changes may apply to their individual circumstances.
Commonwealth Bank declined 10.4% in a single session in the immediate post-budget period, an extraordinary move for a major financial institution, as markets priced in the potential impact of negative gearing restrictions on mortgage lending volumes. The stock tentatively stabilised by Friday.
The second major event was April’s employment data, which showed an unexpected fall in jobs, reinforcing market speculation that the RBA could pause its tightening cycle following three consecutive rate increases. The ASX 200 surged 1.5% on Thursday in response. Gains were capped, however, by caution ahead of next week’s April CPI release, with March inflation already running at 4.6% annually, the fastest pace since September 2023, driven primarily by elevated fuel costs. Industrials, mining, and logistics led the week’s sector gains, with BHP up 1.1% and Evolution Mining advancing 3.0%, while tech and REITs edged lower. The AUD/USD held near 0.7210, supported by the interest rate differential with the US.
A Message From Our Founder
The RBA raised the cash rate to 4.35% on Tuesday, the third consecutive increase this year, and one that carried little surprise by the time it arrived. What the market was watching, as is often the case, was not the decision itself but the language accompanying it. On that front, the board delivered something meaningful: a clear indication that policy settings have now reached a level that affords the board room to pause and observe economic conditions.
That is not a guarantee of stability. Australia’s trimmed mean inflation sits close to 4%, and the April CPI reading due next week will carry genuine weight. If that number surprises to the upside, the pause signal may prove short-lived. These are conditions worth monitoring closely, and they are exactly the kind of moments where staying close to your adviser makes a real difference.
The broader context is worth reflecting on. US equity markets have reached record levels while the global economy absorbs one of the most significant energy supply shocks in several years. Brent crude near US$106 per barrel, driven by the de facto closure of the Strait of Hormuz, is a real drag on household budgets and corporate cost structures alike. That the ASX can close the week at 8,657 in that environment reflects the genuine benefit of Australia’s commodity and industrial skew. It is also worth noting that equity markets and underlying economic conditions do not always move in lockstep in real time.
If you have questions about how the Budget announcements or the current rate environment may affect your personal financial position, we are here to help. Please do not hesitate to reach out.
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.