Australian market insights: Economic trends from February to April 2025

The first quarter of 2025 has served up a powerful reminder: markets don’t operate in a vacuum. Political changes, international tensions, and ongoing cost-of-living concerns have all played a role in shaping the financial landscape. From Australia’s dramatic federal election to global market turmoil triggered by tariff threats, the past few months have kept investors and households on high alert.

Federal election delivers a political earthquake
On 3 May, Australians went to the polls – and the result was a seismic shift. Prime Minister Anthony Albanese led the Labor Party to a commanding majority, growing its presence in the House of Representatives from 77 to 93 seats. It was a crushing defeat for the Liberal-National Coalition, made even more dramatic by the loss of Opposition Leader Peter Dutton’s seat in Dickson – a first in Australian federal history.
Sussan Ley has since taken the reins as the new leader of the Liberal Party, becoming its first female federal leader and marking a significant moment for the party’s future direction.

Global markets rattled by Trump’s tariff blitz
On 2 April, former US President Donald Trump re-entered the global spotlight with sweeping tariffs on all trading partners, calling it “Liberation Day”. China was singled out, with tariff threats reaching as high as 184%. Retaliatory measures soon followed, plunging global share markets by over 15% within days.
The uncertainty sparked a rush to safe-haven assets – gold surged to a record high of AUD 3,300 an ounce by the end of April. While the initial reaction was grim, Trump’s hardline tactics drew global leaders back to the negotiation table. Confidence rebounded, and markets rallied 20% in the weeks that followed.

Interest rates cut – but relief is limited
In a move to support the economy, the Reserve Bank of Australia lowered the official cash rate by 0.25% in February, bringing it to 3.85%. This came on the back of easing inflation, which has settled at 2.4%.
However, the cost-of-living remains a major challenge. While mortgage holders may see some short-term relief, the day-to-day costs of groceries, utilities and fuel continue to put pressure on household budgets.

Property market showing signs of recovery – with caution
Australia’s property market has seen a modest lift. Perth and Adelaide continue to show growth, and Sydney property values rose 1% across the quarter. NAB’s Residential Property Index climbed to +40, suggesting renewed confidence.
Still, housing affordability remains a major issue. Wage growth hasn’t kept pace with rising prices, and new figures from Equifax show that 1.45 million Australians – nearly one in six mortgage holders – are under financial stress. The outlook remains mixed, and the months ahead will be telling.

Employment market holds firm
Despite economic headwinds, Australia’s job market has remained steady. The national unemployment rate continues to hover around 4%, supporting ongoing consumer spending. While many households are tightening their belts, stable employment has so far helped avoid a broader economic downturn.

Energy sector bright spot: Renewables gain ground
One of the most encouraging developments this quarter has come from the energy sector. Australia’s transition to renewable energy is accelerating, with increased investment in solar, wind and other clean technologies. This shift is expected to generate long-term economic benefits and create new employment opportunities if managed effectively.

Looking ahead – flexibility remains critical
With political uncertainty now behind us and signs of easing monetary policy, the path forward appears steadier. But risks remain. Global tensions, housing pressures and inflation continue to pose challenges.
For investors and everyday Australians, adaptability will be essential. The focus for the months ahead should be on managing risk, maintaining financial flexibility and making informed decisions in an evolving economic environment.