March 2025 Market Overview: Navigating Global Shifts and Domestic Slowdowns
The March 2025 Mercer Market Review highlighted significant global economic developments and evolving investment conditions. While Australian markets showed modest resilience, global uncertainties — especially related to geopolitical tensions and trade policies — weighed on investor sentiment.
Australian Economic and Market Conditions
Australia’s Federal Budget for 2025–26 marked a return to deficit following a period of surpluses. However, the country’s debt levels remain low compared to peers. The economy grew by 0.6% QoQ in Q4 2024, slightly above the Reserve Bank of Australia’s (RBA) forecast of 0.5%, driven by stronger-than-expected household consumption.
Labour market indicators weakened, with 52,800 jobs lost in February — the largest monthly drop since 2023. This has tempered expectations of imminent rate cuts by the RBA, although markets still anticipate two more cuts later in 2025
Australian equities declined by -3.3%, outperforming global markets, which fell more sharply. Technology and consumer discretionary sectors were the weakest performers, while utilities remained relatively stable.
Global Market Landscape
Global share markets declined by -5.0%, largely influenced by concerns over renewed US tariff measures. President Trump’s new 25% tariffs on auto and auto parts, as well as reciprocal measures, have increased trade tensions. These developments significantly impacted US technology stocks — notably the “Mag 7” (Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, Tesla), which continued to underperform
In Europe, the German parliament’s decision to boost fiscal spending by €500 billion, particularly on defence and infrastructure, represents a significant policy shift and could bolster regional growth. The Euro strengthened following the announcement, contributing to AUD depreciation against both the Euro and the Pound.
Asset Class Performance and Insights
Fixed Income: Australian bonds rose slightly (+0.1%), while international sovereign bonds dipped (-0.5%), mainly due to rising European yields.
Property and Infrastructure: International listed property fell -2.6%, while listed infrastructure performed positively (+1.6%).
Currency: The AUD remained steady against the USD, but weakened against the EUR and GBP amid global policy shifts.
Outlook: Mercer maintains a positive view on global listed property and Japanese equities, citing attractive valuations and robust earnings prospects.
Looking Ahead
Investors will closely monitor upcoming data releases, particularly the Australian labour market report (April 17) and US manufacturing surveys, which could offer insights into the impact of tariffs on business activity.
Source: Mercer Investments (Australia) Limited, Monthly Mercer Market Review – March 2025.
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