Market Update 11 March 2025

Markets have once again responded to escalating trade tensions, as President Trump has, for the second time, delayed the planned tariffs on imports from Canada, Mexico, and China. This on-again, off-again approach has added to uncertainty, with markets concerned that the continued threat of tariffs could be inflationary and slow growth. Sectors reliant on global supply chains—such as manufacturing and technology—remain particularly vulnerable, facing the risk of higher production costs that may eventually translate into rising consumer prices.

This uncertainty has driven a shift toward defensive assets, with some investors reallocating to bonds and cash. Despite this, the MSCI World Index—tracking the largest companies across developed markets—remains resilient, sitting just ~5% below all-time highs. While markets have reacted, the overall impact has been contained so far. However, as events unfold, caution remains over the potential for retaliatory tariffs and broader economic implications.

Market volatility, like what we are experiencing now, can be unsettling. However, volatility is a normal and expected part of investing, and for patient investors it presents more opportunity than risk.

Why market volatility is not a reason to panic

Markets never move in a straight line. Over time, there are inevitable periods of ups and downs driven by economic cycles, interest rates, inflation, and global events. While short-term fluctuations can be dramatic, history has shown that markets tend to recover and advance over time.

As a client of Provident, we have aligned your investments with your financial needs over different time horizons to ensure that market fluctuations do not disrupt your ability to meet your requirements over the shorter term and ensure the longevity of your assets over the longer term.

Growth assets reward patience

Investing in assets like shares has historically provided higher long-term returns while investing in cash or fixed interest investments like bonds, have helped manage short-term volatility. Consider these key points:

• Markets trend upwards over time — While there are temporary declines, markets have consistently rewarded patient investors who stay invested.

  
  

• Growth assets outperform over the long run — Shares have historically outpaced inflation and delivered superior returns compared to defensive investments like cash and bonds.

  
  

• Trying to time the market is fraught with danger — Selling during a downturn can lock in losses, while missing even a few strong recovery days can significantly impact long-term returns.

  
  

Sticking to your long-term investment strategy

Investing in growth assets requires discipline and a focus on the bigger picture. Short-term volatility is part of the journey, but staying invested and avoiding emotional reactions is the key to achieving strong long-term results. The best approach is to:

✔     Stay invested – Maintain a long-term perspective and avoid making reactionary decisions.

✔     Continue contributing – If you are regularly investing, downturns allow you to buy more assets at lower prices, enhancing long-term returns.

✔     Trust the process – Market recoveries often happen quickly and unexpectedly, reinforcing the importance of patience.

Important note: While every care has been taken in the preparation of this document, AMP Capital Investors Limited (ABN 59 001 777 591, AFSL 232497) and AMP Capital Funds Management Limited (ABN 15 159 557 721, AFSL 426455) make no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This document has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this document, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This document is solely for the use of the party to whom it is provided.