The Weekly | Global uncertainty at record highs – what now?

In this week’s edition of The Weekly, we look at how the team is investing through rising global uncertainty, with markets grappling with fresh tariff headlines, volatile bond yields and shifting sentiment. We explore the latest macro developments, including the U.S. tariff pause (excluding China), surging Treasury yields and what it all means for equities, commodities and currencies. Plus, we take a closer look at how record levels of uncertainty are weighing on sentiment, economic indicators and market behaviour.

Please note, there will be no edition of The Weekly next Monday due to the Easter long weekend.

Market Updates

We witnessed another seesaw week in markets, driven by tariff-related headlines, with the S&P/ASX 200 Accumulation Index ending relatively flat (-0.28%) after Monday and Wednesday’s losses were largely recouped on Tuesday and Thursday. The S&P/ASX Small Ordinaries Accumulation Index ended up (+1.84%). It was ‘risk on’ again with technology, TMT (Technology, Media and Telco) and consumer discretionary being the best performing sectors, while healthcare and energy were the worst. Gold was up another 4.5%, up 21.0% year to date and 35.5% over the past 12 months. Meanwhile, Brent oil fell another 9.6% to US$63.4/bbl. The AUD increased 2.9% to 62.4 US cents.

On Wednesday, U.S. President Trump announced that he was authorising a 90-day pause on the higher reciprocal tariffs for most countries, effective immediately. The news sent markets climbing, with the Nasdaq Composite gaining over 12%, its second-best day on record. The S&P 500 Index (large-caps) closed the week up 5.7%, Russell 2000 Index (small-caps) was up 1.8% and MSCI World Index (AUD) was up 0.29%. China was notably excluded from the tariff pause, with the escalating trade war between the two countries ending with the U.S. imposing an effective 145% tariff on Chinese imports (now excluding electronics which accounts for around 25% of imports) and U.S. imports into China now sitting at 125%.

Surging U.S. treasury yields were widely cited as the reason behind Trump’s tariff pause. The volatility, uncertainty and recession risk drove yields up, making future government debt more expensive to issue. Higher interest rates on national debt adds pressure to the budget and already high debt levels. It also has flow on effects to the rest of the world given U.S. treasuries are a core part of the global financial system. See our ‘In Focus’ segment below for more on the impact of uncertainty on sentiment, the economy and markets.

Key watchpoints for the week include U.S. Treasury yields, any further tariff exemptions and U.S. earnings season.

In focus: Global uncertainty has hit all-time highs

The roll out of the Trump administration’s reciprocal tariffs regime has caused gauges of uncertainty to hit record highs. The good news in the past week was that the U.S. has allowed for a 90-day period where tariffs are capped at 10% for non-retaliating trading partners, with scope for negotiations. This has raised investor hopes for the de-escalation of tit-for-tat trade wars. But on the flipside, uncertainty about what policy will look like in 90 days’ time has not been completely dealt with, and the risk is that this uncertainty could cause the private sector to hold off spending and borrowing decisions for a little while longer. Further, effective tariff rates have still hit generational highs on a trade-weighted basis, because China has borne the brunt of reciprocal tariffs, and will effectively pay for the reduction in tariffs for other countries relative to the baseline of Trump’s original plan. Interestingly, we have also seen bond yields globally rise despite concerns about the shock to growth from tariffs, in part because of expectations for higher inflation from tariffs, and in part because foreign buying of U.S. Treasuries has dwindled.

Investors tend to respond to uncertainty through momentum reversal. History suggests that there is a tendency for investors to sell yesterday’s winners and buy yesterday’s losers when uncertainty is high, because high uncertainty usually indicates a turning point is near. In early 2025, we have indeed seen some unwinding of crowded positioning, especially among long-duration growth names and banks. Now, investors have to ask whether they have seen peak uncertainty and a trough in sentiment, such that momentum reversal would mean buying cyclicals relative to defensives. It is perhaps too early to tell at this stage given how rapidly markets are moving. But arguably in 90 days’ time, there will be much more clarity.

Stock watch

CSL Limited (ASX: CSL)

We have been increasing our holding in CSL Limited (ASX: CSL), believing the 7% share price decline in the past week adequately captures earnings risks from tariffs. CSL is now trading at its lowest price levels since 2019, its lowest price to earnings (PE) multiple in a decade, and its lowest relative premium to the ASX 200 in over 15 years. The main driver behind the share price decline is the imminent announcement of “major tariffs on pharmaceuticals” from the U.S. Prior to this, pharmaceuticals including plasma, were exempt from the broad reciprocal tariffs. While we don’t know what the tariffs will entail, we believe the risk to earnings is now priced in, with the company able to pull levers, such as moving supply chains and product destinations, to partly offset the total impact.

Held in: WAM Leaders (ASX: WLE) 

Aussie Broadband (ASX: ABB)

Aussie Broadband’s (ASX: ABB) Thursday trading update was well received by the market with the telco company reaffirming its medium term growth outlook, supported by the strongest quarterly subscriber growth in three years. By FY2028, Aussie Broadband aims to have the group revenue surpass $1.6 billion with EBITDA margins expected to expand beyond 12.5%. We believe structural tailwinds, particularly in residential and enterprise segments, will support the company’s growth targets. Nearer term, Aussie Broadband also reaffirmed its FY2025 guidance which helps us get increasingly confident in the momentum heading into the second half. Aussie Broadband’s share price ended the week up 3.4%.

Held in: WAM Capital (ASX: WAM) and WAM Research (ASX: WAX)

MSCI Inc. (NYSE: MSCI)
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MSCI Inc. (NYSE: MSCI), a leading provider of indices, data and analytics for global financial market participants, ended the week up 6.8%. With the leading global indices, MCSI World and MSCI ACWI (All Country World Index), MSCI is a beneficiary of relative outperformance of global markets compared to the U.S. S&P500 and Nasdaq indices. Year to date, MSCI’s key MSCI World and MSCI ACWI are both outperforming U.S. markets. MSCI is a high quality business with the added benefit of being largely unaffected by recent tariff announcements. With over U.S. $1 billion held by CEO Henry Fernandez, there is a strong alignment with shareholders and we are confident they will remain disciplined around cost control whilst continuing to invest for long term growth.
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Held in: WAM Global (ASX: WGB)

MYOB (Intermediate Capital Partners) ​​​​​​

MYOB is a leading business management platform, offering a range of cloud-based and AI-powered solutions to help businesses manage their finances, operations and more. MYOB was acquired by private equity firm KKR in a public-to-private transaction in 2019 and continues to grow its earnings through organic growth, strategic acquisitions and new product launches. WAM Alternative Assets’ investment in MYOB, alongside its private debt instrument partner Intermediate Capital Group, provides exposure to a market leading business with strong cashflows and downside protection provided though the structure of a senior secured loan.

Index returns performance table

Shareholder Presentations

Thank you to those who attended our Shareholder Presentations earlier this month. It was lovely to meet so many of you. We particularly enjoyed answering your questions in each city and many of you requested written answers to these questions. As promised, you can watch the recording of the Sydney Q&A panel here.

March 2025 Investment Update

We are pleased to share the March 2025 investment update for all our listed investment companies. You can find an update for each company here:

• WAM Capital (ASX: WAM)
• WAM Leaders (ASX: WLE)
• WAM Global (ASX: WGB)
• WAM Microcap (ASX: WMI)
• WAM Alternative Assets (ASX: WMA)
• WAM Strategic Value (ASX: WAR)
• WAM Research: (ASX: WAX)
• WAM Active: (ASX: WAA)

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You can also follow Wilson Asset Management Founder and Chairman Geoff Wilson AO on X.

If you have any feedback you would like to share or wish to speak to a member of the Wilson Asset Management team, please respond to this email or call Christopher Ball on 02 9247 6755. You can also email us at [email protected]​​​​​.

^*All Australian S&P indexes in this table are accumulation indexes, meaning they account for both price changes and the reinvestment of dividends, providing a measure of total return.

^#MSCI World (MSCI Daily Total Return Net World) and MSCI World SMID (MSCI WORLD SMID CAP Net Return) are both in AUD and are total return indexes i.e. include share prices and dividends. S&P 500 Index and Russell 2000 Index are similarly total return indexes.

^{^}Corporate bond yields represent the return investors receive for holding debt securities issued by companies. These yields vary based on factors such as the issuer’s credit rating, economic conditions, and market interest rates, serving as a key benchmark for corporate borrowing costs.

^**Australian long-term government bond yields represent the interest rates on government debt securities with extended maturities, typically 10 years or more. These yields reflect investor expectations for inflation, economic growth, and monetary policy, serving as a key benchmark for long-term borrowing costs in the economy.

^##The RBA cash rate refers to the interest rate set by the Reserve Bank of Australia (RBA) for overnight loans between banks. It serves as a benchmark for borrowing costs across the economy, influencing interest rates on mortgages, savings accounts, and business loans.