What’s happening in global markets, and why it’s not as unusual as it feels.
What Just Happened?
Global markets have reacted sharply this week to a major shift in U.S. trade policy. Under the new ‘Liberation Day’ tariff regime, sweeping import taxes were imposed in an effort to rebalance the U.S. trade deficit and bring manufacturing back onshore.
The response? One of the sharpest market sell-offs in years.
- ASX Losses: On Monday morning, the S&P/ASX 200 index dropped over 6% at the open, wiping out approximately $160 billion in value.
- U.S. Markets: Over $9 trillion was erased from U.S. markets in a single trading session – the biggest one-day fall since 2022.
- Australian Dollar: Dropped below 60 U.S. cents – a level not seen since the early days of the pandemic in 2020.
Sectors most exposed to global trade – including mining, banking, and energy – led the sell-off.
What Are the New Tariffs?
| Country | New U.S. Tariff Rate |
| All imports | 10% base rate |
| China | 54% |
| European Union | 20% |
| Japan | 24% |
| Australia | 10% |
These broad-based tariffs caught markets off guard and have raised fears of a global trade war – particularly for export-reliant economies like Australia.
How the World Is Responding:
More than 50 countries have already moved to engage the U.S. in urgent trade discussions. Reactions have varied significantly:
- China: Retaliated with a 34% tariff on U.S. imports
- Vietnam and Cambodia: Slashed or removed tariffs on U.S. goods
- South Korea: Sent trade envoys to Washington
- Taiwan: Pledged zero tariffs on U.S. goods
- Australia, India, Japan: No retaliatory measures announced
Interestingly, U.S. companies with strong Southeast Asian supply chains, such as Nike, Lululemon, and Deckers – saw share price rallies as tariff relief from Vietnam and Cambodia created positive tailwinds.
Seen It Before: Recent Events That Shook Markets – Then Settled
While this week’s volatility has been pronounced, it’s far from unprecedented. Markets have always responded sharply to uncertainty, and then recalibrated. Here are a few recent examples to help put the current movement into perspective:
| Event: | What Happened: | What Followed: |
| Oct 2022: UK Mini-Budget Crisis | Unfunded tax cuts triggered global bond panic | Markets rebounded within 6 weeks |
| Mar 2023: U.S. Bank Failures | Collapse of Silicon Valley Bank and Signature Bank spooked investors | Coordinated central bank action restored stability in under a month |
| Oct 2023: Israel-Gaza Escalation | Geopolitical tensions pushed oil prices up, ASX fell 3% | Markets stabilised as conflict remained contained |
These moments felt significant in the moment, but each time, investors who stayed disciplined were rewarded.
Context from History: This Is What Markets Do
Corrections aren’t rare, they’re part of the investment journey. The Australian market has a long history of sharp but temporary downturns.
Since 1980, the All-Ordinaries Index has seen:
- 19 notable corrections (10% or greater declines)
- Average decline: 13.9%
- Average duration: 13 weeks
- Current (April 2025): 10.5% decline over just 4 weeks
Here are a few more:
| Event: | Drop: | Recovery Timeline: |
| 2010 Correction | 17% | Recovered within 5 weeks |
| 2022 Correction | 17.3% | Took 24 weeks to bottom out |
| Current (2025) | 10.5% (so far) | In-line with historical averages |
What these patterns show is simple: markets fall – and they recover. Often more quickly than expected.
What Should Investors Do?
Volatility can feel uncomfortable, but reacting emotionally can be far more damaging than any market dip.
Here’s what smart investors do during periods like this:
- Stay invested: Selling during downturns locks in losses
- Maintain diversification: Spreading risk across assets, sectors and geographies matters
- Hold liquidity buffers: Especially for retirees or near-retirees
- Focus on long-term goals: Not short-term headlines
Importantly, a weaker Australian dollar can actually boost the local value of international investments, giving well-diversified portfolios a natural buffer during global market drops.
Final Thought:
This isn’t a sign that something is broken. It’s a sign that markets are doing what they’ve always done – reacting fast to uncertainty.
The difference between short-term stress and long-term success, is strategy.
At Clear Sky, your portfolio is actively managed by a Team that plans for moments like this. We don’t panic. We stay focused. We make adjustments where needed. And we guide our clients through with clarity and confidence.
You don’t need to act. Your plan is already doing what it’s designed to do. We’ve got this, and if you’d like to speak to one of our financial advisers, please don’t hesitate to reach out. We are here to help and support you. Please click here.
Information contained in this document is considered to be true and correct at time of publication. In addition, the information provided is general information only, and does not take into account any individuals’ objectives, financial situation and needs. Before acting on any information contained herein, you should consider the appropriateness of the advice having regard to your personal objectives, financial situation and needs.
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