15 January 2025
Markets Rocked by Uncertainty: A Look at the ASX and S&P 500
Since mid-December 2024, both the Australian and US markets have faced heightened volatility, driven by shifting economic signals and policy adjustments. The ASX 200 and S&P 500, critical benchmarks, highlight these movements, reflecting broader concerns about interest rates, supply chain disruptions, and economic resilience.
Key Stock Movements (16 December to 14 January)
In the US, Apple (AAPL) experienced a decline of 4.5% by 14 January, as concerns over slowing iPhone sales in key global markets persisted. Meanwhile, Nvidia (NVDA) continued its strong performance, ending the period with a 7.1% increase, fuelled by optimism around AI and semiconductor advancements.
In Australia, BHP Group (BHP) fell by 2.6%, weighed down by weaker commodity prices and ongoing supply chain disruptions linked to port strikes. Conversely, CSL Limited (CSL) extended its gains, closing the period up 3.4%, supported by consistent demand for its biopharmaceutical offerings.
The energy sector saw contrasting trends: Woodside Energy (WDS) dropped 1.9% due to fluctuating oil prices, while Santos (STO) rose 2.7% on continued strength in natural gas demand.
Market Overview
The S&P/ASX 200 rose slightly from 8,314 on 16 December to a peak of 8,370.7 by 7 January (+0.7%), before falling 2.1% to 8,191.9 by 12 January. The S&P 500 saw a sharper decline, dropping 2.5% from 6,032.38 in mid-December to 5,881.63 by year-end, and a further 0.9% to 5,827.04 by 10 January.
Drivers Behind Market Movements
- Hawkish Fed Policy: The US Federal Reserve’s reduced expectations for 2025 rate cuts triggered global sell-offs, including a 3% dip in the S&P 500 and 2.2% in the ASX 200.
- Robust US Data: Strong job openings and services sector activity raised concerns about delayed rate cuts, pushing bond yields higher.
- Australian Port Strikes: Industrial actions disrupted supply chains, impacting Australian market stability.
Predictions for January
- Continued Volatility Amid Policy Uncertainty: The incoming Trump administration’s unclear policy directions are expected to contribute to economic uncertainty and market volatility. Investors may consider maintaining diversified portfolios to navigate potential fluctuations.
- Potential Interest Rate Cuts in Australia: Major banks, including NAB, anticipate that the Reserve Bank of Australia (RBA) may implement interest rate cuts in 2025 to alleviate cost-of-living pressures and boost consumer confidence. Such monetary policy adjustments could influence market liquidity and investment strategies.
Sector-Specific Performance Variations
- Commercial Property Recovery: CEOs in the Australian commercial property sector predict a recovery in 2025, driven by controlled costs and expected interest rate cuts. This optimism suggests potential growth in real estate investments.
- Luxury Goods Market Challenges: The global luxury market is experiencing a slowdown, with major brands reporting sales declines. Factors such as changing consumer preferences in China and potential US tariffs under the Trump administration may continue to impact this sector.
- Technology Sector Outlook: Despite recent declines in major tech stocks, some analysts, including those from Goldman Sachs, advise staying invested in the US stock market, anticipating economic expansion and potential market gains.
*Any advice provided is general in nature and does not take into account the viewer’s specific needs and circumstances. You should consider your own financial position, objectives and requirements to determine the type of advice and products to best suit your needs.
© 2025 JHC Operating Co Pty Ltd (formally Neural One Australia Pty Ltd) is an authorised representative of Jaaims Technologies Pty Ltd (Australian Financial Services Licence 519985)
Sources
CEOs tip recovery for commercial property: https://www.theaustralian.com.au/business/property/commercial-property-primed-for-recovery-in-2025-amid-calls-for-tax-and-labour-reform/news-story/443a057323dab56047a64ccbc22d5354U.S. stocks are falling. Here’s why Goldman says to stay invested in 2025: https://www.marketwatch.com/story/u-s-stocks-are-falling-heres-why-goldman-says-to-stay-invested-in-2025-0bf53fab
Major bank’s huge interest rate call: https://www.news.com.au/finance/economy/interest-rates/nab-boss-believes-australia-has-passed-the-hardest-points/news-story/d5464fc0f07e1fd9b5541874131aaf8b