In April 2025, a sudden policy shift caused sharp market volatility. The U.S. announced new tariffs, which sent investors into panic. Markets dropped quickly but recovered just as fast once the U.S. paused its trade plans. Even with some calm returning, risks still remain.
In this blog, LBW explains what triggered the recent volatility, how markets responded, and what to watch next. Our Geelong financial advisors at LBW can help you to plan during uncertain times.
Tariff shock sends markets into a spiral
How the tariff news shook investors
On April 2nd, the U.S. introduced new trade tariffs. Investors feared these changes could slow the economy and raise prices. As a result, the VIX, which tracks expected stock market changes, jumped from 22-52. This signalled a significant increase in market volatility. Consequently, the S&P 500, a leading share index, fell 12% in a few days.
Technology and growth-focused companies led the decline. However, steadier sectors like health care and utilities held up better.
Bond markets reflected the same concern
Investors turned to safer bonds. Credit spreads widened, meaning investors demanded higher returns for taking on extra risk. The impact was most severe in riskier bond categories.
Our Geelong financial advisors helped our clients understand what these shifts mean for their financial investments.
Markets recover after a policy pause
What changed the investors’ mood
On April 9, the U.S. government paused most new tariffs for 90 days. Because of this, fear was quickly reduced, and confidence was starting to be restored.
Two other events supported the market’s rebound. Firstly, companies posted earnings that rose 12%, well above the 6% forecast. Then, the U.S. and China agreed to ease some trade rules on May 12.
Markets rebounded
Technology shares and other high-growth sectors led the recovery. Bond spreads also returned to earlier levels. Although the recovery happened quickly, caution remains wise.
If you’re unsure how the market volatility affected you, please speak with our financial advisory team in Geelong for guidance on your financial investments.
Ongoing financial risks
Share prices remain high
Markets may seem calm again, but warning signs remain. U.S. companies now trade at 21 times expected earnings. This is high by historical standards. Meanwhile, strong company results continue to support tight credit spreads. These signs create tension between solid business results and expensive prices.
Debt and interest rates raise concerns
Long-term U.S. government bond yields increased. The U.S. dollar weakened by about 4%. In May 2025, Moody’s downgraded the U.S. credit rating. This downgrade followed concerns over growing government debt. Shortly after, long-term bond yields moved above 5%.
These signs suggest that market risks have only shifted focus.
Our Geelong financial advisors at LBW can help you reassess your risk exposure. If you’d like more support, please contact our financial advisory team.
Get help managing market volatility
You cannot stop market volatility, but you can prepare for it. A well-structured financial plan helps you preserve your financial potential. Our Geelong financial advisors offer straightforward advice and tailored solutions. We can help you adjust your financial goals when the market changes.
Call (03) 5221 6111 or visit www.lbwca.com.au to speak with someone you can trust.
This blog provides general educational information only. The content does not take into account your personal objectives, financial situation or needs. You should consider taking financial advice tailored to your personal circumstances.
LBW Business + Wealth Advisors is an Authorised Representative of LBW Wealth Pty Ltd ABN 56 652 382 128 AFSL 534569. Please see our website www.lbwca.com.au or call 03 5221 6111 for more information on our available services.
