Market Volatility Returns Amid Global Economic Uncertainty

Posted on 29 April 2025 | by Allan Hall

Global financial markets have experienced renewed volatility, with major indices posting sharp declines in response to a mix of economic and geopolitical pressures.

Escalating trade tensions, downgraded global growth forecasts and ongoing uncertainty around central bank policy settings have contributed to heightened investor concern.

The introduction of new tariffs by the United States targeting key trading partners such as China, Canada, the EU and Mexico has raised the risk of slower global growth and rising inflation. These measures are expected to disrupt supply chains, reduce corporate profit margins, and potentially weigh on GDP. In addition, recent reports point to weakening U.S. consumer confidence, adding further pressure to market sentiment.

In Australia, the S&P/ASX 200 fell 10.2% over 18 days, while the MSCI World Index dropped 7.95% over a similar period. Although there have been modest rebounds, volatility levels have lifted from previous lows. The VIX Index, a common measure of market volatility, has also risen, though it remains close to long-term averages.

Amid these developments, investors are reminded of the importance of maintaining a long-term perspective. Diversification across asset classes continues to be a key strategy for managing risk and reducing the impact of short-term market movements. While current conditions may appear uncertain, a measured and disciplined investment approach remains essential.

Read full overview »

If you have concerns about how recent market movements could affect your investment strategy, now is an ideal time to seek professional guidance.

CONTACT ALLAN HALL FINANCIAL PLANNING

General Advice Warning

The information contained in this article is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs and, where appropriate, seek professional advice from a financial advisor. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia. Robin Bell, Martin Cimino, Angelo Adam and Allan Hall Financial Planning Pty Ltd are Authorised Representatives of Consultum Financial Advisers Pty Ltd ABN 65 006 373 995 AFSL 230323.

economy, financial planning, inflation, investments, strategy, volatility

US Tariff Announcement

Posted on 10 April 2025 | by Allan Hall

Context

On 2 April 2025, U.S. President Donald Trump announced a series of new tariffs, collectively referred to as the “Liberation Day” tariffs, aimed at restructuring international trade relationships and bolstering domestic industries.

These measures include a universal baseline tariff of 10% on all imported goods, with additional reciprocal tariffs targeting specific countries based on their existing trade barriers against U.S. products.

Canada and Mexico are excluded from this round of Tariffs.

Key Aspects of the “Liberation Day” Tariffs

Baseline Tariff: A 10% tariff applies to all imports into the United States, effective 5 April 2025.

Reciprocal Tariffs: Additional tariffs are imposed on countries with significant trade barriers against U.S. goods. Notable examples include:

China 34%
EU 20%
Japan 24%
India 26%

Automobile Tariffs: A 25% tariff on all foreign-made automobiles is set to take effect at midnight on 3 April 2025.

Based on information available at this stage, Bloomberg estimates that these country-specific tariffs could add up to around 17 percentage point (ppt) the US average effective tariff rate, using the 2024 US trade composition.

The White House flagged that these new tariffs won’t come on top of the sectoral levies on steel and aluminium, as well as the new duties on cars and car parts due to start from April 3. Energy imports are also excluded, as well as some other products already threatened by additional sectoral tariffs.
The new tariffs will be additional to levies already charged on individual countries, according to the executive order.
Taking this into account, Bloomberg estimates that these new “reciprocal tariffs” could add around 17% to the average effective tax rate. Adding to tariffs on China, Canada and Mexico already implemented, this could take the average effective tariff rate to around 22%, from 2.3% in 2024.

Estimating the impact on the US economy is not straightforward. A Fed model from 2018 suggests each 1 percentage point (ppt) hike in the tariff rate lowers Gross Domestic Product (GDP) by 0.14% and pushes up core Personal Consumption Expenditures (PCE) prices by 0.09%. Hiking tariffs by 17ppt with this announcement would therefore point to a Gross Domestic Product (GDP) hit of 2.4% and a price boost of 1.4% – likely playing out over the next two to three years.

For inflation, firms’ pricing power, dollar moves, and the underlying state of the economy all matter, and interact in unpredictable ways. Early evidence from the data underscores the complexity. Import prices are up since Trump came into office, pointing to pass-through of tariffs to US buyers. At the same time, inflation readings in categories where imports are an important part of the consumer basket are down — possibly reflecting front loading of imports leaving retailers with an excess of inventory.

Potential Impacts on Investment Markets

1 Equities

Short-Term Volatility: Global equity markets may experience increased volatility, particularly in sectors tied to global trade — including industrials, autos and technology.
Exporters & Multinationals: U.S.-based companies with global supply chains or significant foreign sales may face higher input costs and retaliatory tariffs, affecting margins.
Domestic Manufacturing Tilt: U.S. companies with a domestic production base may benefit if reshoring trends accelerate or trade barriers become entrenched.

2 Fixed Income

Inflation Risk: Tariffs on imports typically increase input costs, which can filter into higher consumer prices. If inflation expectations rise, bond yields could follow suit.
Central Bank Response: The Federal Reserve may be slower to cut rates, especially if tariffs are inflationary, adding duration risk to long-dated bonds.

3 Commodities and Currencies

Commodity Prices: If global growth slows due to a trade disruption, commodity demand may weaken — oil and industrial metals are particularly sensitive.
U.S. Dollar: Uncertainty and capital flight may initially strengthen the USD, but long-term trade imbalances and fiscal risks could reverse this trend.

4 Geopolitical Risk

The likelihood of retaliatory measures from China, the EU, and other major economies may lead to a broader trade war environment, which markets have historically reacted to with caution.

Portfolio Considerations

This is a rapidly changing environment, with the potential for escalation via further tariffs from other countries, or alternatively, exemptions based on negotiation. Given the lack of clarity around the path forward, we expect that volatility is likely to remain elevated and we remain focused on investing for the long term.

We are not suggesting any changes to portfolios on the basis of today’s announcements, however if you have questions about your portfolio, we suggest raising them with your adviser to ensure your portfolio remains appropriate for your objectives and risk tolerance.

CONTACT ALLAN HALL FINANCIAL PLANNING

General Advice Warning

economy, financial planning, income, inflation, International Services, investments, pricing, risk

Parliament House, Canberra with a flag on top

2025–26 Federal Budget Highlights

Posted on 26 March 2025 | by Allan Hall

The Federal Treasurer, Dr Jim Chalmers, handed down the 2025–26 Federal Budget on 25 March 2025.

Guided by five priorities, including helping with the cost-of-living, building more homes and investing in education, the Budget includes two new personal tax cuts for all Australian individual taxpayers, increased Medicare levy thresholds, a ban on foreign individuals buying existing homes and a proposed reduction to student debts.

Described by the Treasurer as a “plan for a new generation of prosperity in a new world of uncertainty”, the Budget did not include any new measures affecting the taxation or regulation of superannuation or new income tax measures affecting small businesses.

Being the government’s last Budget before the expected federal election, the start dates of a number of previously announced but unenacted tax measures have been deferred until amending legislation is enacted.

The tax and tax-related highlights are set out as follows. While this Budget provides an indication of some measures that may be pursued post-election, in reality, they all hang in the balance until a new government is formed and its priorities are laid down.

Small Business

There were no new measures for small business other than the Government’s commitment to deliver the previously announced measure to temporarily extend to 30 June 2025 the $20,000 instant asset write off threshold. This Bill is currently before the House of Representatives and, unless enacted the instant asset threshold for this 2025 financial year will revert to $1,000. There was no announcement of what lies beyond 30 June 2025 for this small business measure.

Individuals

The marginal tax rate for the personal income tax threshold bracket from $18,201 to $45,000 will be reduced from 16% to 15% from 1 July 2026, and further reduced to 14% from 1 July 2027.
The Medicare levy low‑income thresholds for singles, families, and seniors and pensioners will be increased from 1 July 2024.
Student loan debts will be cut by 20% and other reforms will be made to the student loan repayment system from 1 July 2025.
The start date of the 2024–25 Budget measure to strengthen the foreign resident CGT regime will be deferred from 1 July 2025 to the later of 1 October 2025 or the first 1 January, 1 April, 1 July or 1 October after assent.
Foreign ownership of housing will be restricted.

Tax administration

Rules on managed investment trusts will be amended to ensure legitimate investors can continue to access concessional withholding tax rates from 13 March 2025.
The start date of the 2023–24 Budget measure to extend the clean building managed investment trust withholding tax concession will be deferred from 1 July 2025 to 1 January, 1 April, 1 July or 1 October after assent.
The ATO will be given $999M funding over 4 years to extend and expand its tax compliance activities.

Indirect taxes

Indexation on draught beer excise and excise equivalent customs duty rates will be paused for a 2‑year period from August 2025.
The excise remission cap is proposed to be increased from $350,000 to $400,000 each financial year for all eligible alcohol manufacturers from 1 July 2026. The Wine Equalisation Tax producer rebate would similarly increase from $350,000 to $400,000 each financial year from 1 July 2026.

READ FULL FEDERAL BUDGET TAX SUMMARY

Full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au.

To discuss how these Budget measures impact you or your business, please contact your Allan Hall Advisor.

CONTACT ALLAN HALL BUSINESS ADVISORS

Budget, capital gains tax CGT, compliance, government, health, inflation, property, small business, tax, tax debt, tax rate

US Election: Implications for Investors and the Economy

Posted on 5 December 2024 | by Allan Hall

Navigating Economic Challenges in a Transformed Landscape

Donald Trump’s return to the White House is set to have significant implications for the US economy and global markets

Dr Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, commented: “The economic environment is considerably tougher than it was during Trump’s first term. However, these constraints may nudge the administration toward more balanced, supply-side reforms, which could ultimately benefit markets in the long run.”

Key economic indicators

Higher inflation, larger budget deficits and increased bond yields are shaping a more constrained environment for policy-making

Inflation has risen to 3%, federal debt has reached 125% of GDP, and bond yields are at their highest levels in years, limiting the potential for aggressive reforms without market repercussions

While Donald Trump’s re-election reflects a strong voter mandate for addressing key issues like the cost of living and immigration, the current economic landscape presents challenges far greater than those during his first term in 2017.

Despite these, Trump’s administration is expected to push forward with policies aimed at tax cuts, deregulation and trade protectionism. However, constraints such as market sensitivity to rising bond yields, a slim Republican majority in the House and limited flexibility in mandated spending could temper the more extreme measures.

Mixed market reactions to the US election

While US stocks initially rallied, concerns about tariffs and inflationary pressures have weighed on global equities. Meanwhile, cryptocurrencies like Bitcoin have surged, reflecting speculation about crypto-friendly policies.

While investors should prepare for potential volatility, the long-term outlook for global equities remains cautiously optimistic, albeit with more moderate returns than in previous years.

For further insights and updates on the evolving economic landscape, read the full article here »

CONTACT ALLAN HALL FINANCIAL PLANNING

General Advice Warning

economy, financial planning, inflation, investments

2023-24 Federal Budget

Posted on 10 May 2023 | by Allan Hall

Tax and Superannuation Overview

2023-24 Federal Budget Highlights

The Federal Treasurer, Dr Jim Chalmers, handed down the 2023–24 Federal Budget at 7:30 pm (AEST) on 9 May 2023.

The Budget forecasts the underlying cash balance to be in surplus by $4.2 billion in 2022–23, the first surplus since 2007–08, followed by a forecast deficit of $13.9 billion in 2023–24.

The Treasurer has described the tax measures as “modest but meaningful” including changes to the Petroleum Resources Rent Tax and confirmation of a 1 January 2024 implementation of the BEPS Pillar Two global minimum tax rules.

A range of measures provide cost-of-living relief to individuals such as increased and expanded JobSeeker payments and better access to affordable housing. No changes were announced to the Stage 3 personal income tax cuts legislated to commence in 2023–24.

As part of the measures introduced for small business, a temporary $20,000 threshold for the small business instant asset write-off will apply for one year, following the end of the temporary full expensing rules.

The full Budget papers are available at www.budget.gov.au and the Treasury ministers’ media releases are available at ministers.treasury.gov.au. The business tax and superannuation highlights are set out below.

READ FULL BUDGET REPORT

Business highlights

The instant asset write-off threshold for small businesses applying the simplified depreciation rules will be $20,000 for the 2023–24 income year.
An additional 20% deduction will be available for small and medium business expenditure supporting electrification and energy efficiency.
FBT exemption for eligible plug-in hybrid electric cars will end from 1 April 2025.
Employers will be required to pay their employees’ superannuation guarantee (SG) entitlements at the same time as they pay their salary and wages from 1 July 2026.

Small business depreciation — instant asset write-off threshold of $20,000 for 2023–24

The instant asset write-off threshold for small businesses applying the simplified depreciation rules will be $20,000 for the 2023–24 income year.

Small businesses (aggregated annual turnover less than $10 million) may choose to calculate capital allowances on depreciating assets under a simplified regime. Under these simplified depreciation rules, an immediate write-off applies for low cost depreciating assets. The measure will apply a $20,000 threshold for the immediate write-off, applicable to eligible assets costing less than $20,000 first used or installed between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write-off multiple low-cost assets. The threshold had been suspended during the operation of temporary full expensing from 6 October 2020 to 30 June 2023.

Assets costing $20,000 or more will continue to be placed into a small business depreciation pool under the existing rules.

The provisions that prevent a small business entity from choosing to apply the simplified depreciation rules for 5 years after opting out will continue to be suspended until 30 June 2024.

Increased deductions for small and medium business expenditure on electrification and energy efficiency

An additional 20% deduction will be available for small and medium business expenditure supporting electrification and energy efficiency.

The additional deduction will be available to businesses with aggregated annual turnover of less than $50 million. Eligible expenditure may include the cost of eligible depreciating assets, as well as upgrades to existing assets, that support electrification and more efficient use of energy. Certain exclusions will apply, including for electric vehicles, renewable electricity generation assets, capital works, and assets not connected to the electricity grid that use fossil fuels.

Examples of expenditure the measure will apply to include:

assets that upgrade to more efficient electrical goods (eg energy-efficient fridges)
assets that support electrification (eg heat pumps and electric heating or cooling systems), and
demand management assets (eg batteries or thermal energy storage).

Total eligible expenditure for the measure will be capped at $100,000, with a maximum additional deduction available of $20,000 per business.

When enacted, the measure will apply to eligible assets or upgrades first used or installed ready for use between 1 July 2023 and 30 June 2024. Full details of eligibility criteria will be finalised in consultation with stakeholders.

FBT exemption for eligible plug-in hybrid electric cars to end

The FBT exemption for eligible plug-in hybrid electric cars will end from 1 April 2025.

Arrangements involving plug-in hybrid electric cars entered into between 1 July 2022 and 31 March 2025 remain eligible for the exemption.

Employers to be required to pay SG on payday

Employers will be required to pay their employees’ superannuation guarantee (SG) entitlements at the same time as they pay their salary and wages from 1 July 2026.

Employers are currently required to make SG contributions for an employee on a quarterly basis to avoid incurring a superannuation guarantee charge.

The proposed commencement date of 1 July 2026 is intended to provide employers, superannuation funds, payroll providers and other stakeholders sufficient time to prepare for the change.

Changes to the design of the superannuation guarantee charge will also be required to align with the increased payment frequency. The government will consult with relevant stakeholders on the design of these changes, with the final framework to be considered as part of the 2024–25 Budget.

In addition, funding will be provided to the ATO to, among other things, improve data matching capabilities to identify and act on cases of SG underpayment.

Superannuation measures

Superannuation earnings tax concessions will be reduced for individuals with total superannuation balances in excess of $3 million from 1 July 2025.
The non-arm’s length income (NALI) provisions will be amended to provide greater certainty to taxpayers.

Reducing tax concessions for super balances exceeding $3M

Superannuation earnings tax concessions will be reduced for individuals with total superannuation balances in excess of $3 million.

From 1 July 2025, earnings on balances exceeding $3 million will incur a higher concessional tax rate of 30% (up from 15%) for earnings corresponding to the proportion of an individual’s total superannuation balance that is greater than $3 million. The change does not impose a limit on the size of superannuation account balances in the accumulation phase and it applies to future earnings, ie it is not retrospective.

Earnings relating to assets below the $3 million threshold will continue to be taxed at 15%, or zero if held in a retirement pension account.

Interests in defined benefit schemes will be appropriately valued and will have earnings taxed under this measure in a similar way to other interests.

Need help?

If you would like assistance to interpret these changes and how they may affect your individual or business circumstances, please contact your Allan Hall Advisor on 02 9981 2300.

CONTACT ALLAN HALL BUSINESS ADVISORS

How businesses with accurate data insights are surviving inflation

Posted on 12 September 2022 | by Allan Hall

Article by SmartCompany: The Great Data Divide

How SMEs with accurate data insights are surviving the inflationary cycle

Key points

Real-time data is more accessible to small and medium businesses than ever before
It’s allowing a generation of business owners who’ve had to rely on experience and gut feel to transform their businesses into data-driven operations and grow their revenues and margins in the face of difficult economic headwinds

Regardless of industry, businesses can be divided into haves and have nots by the accuracy and recency of their data. For those running on gut feel, or how they’ve always done it, a perilous combination of economic drivers could push them to the wall.

With every news story headline, the outlook seems to get more challenging for SMEs. With supply chains stretched, prices rising and skilled employees impossible to find, there are pressures across every single facet of business.

Unfortunately, if you believe the forecasts — it’s likely to stay that way for a while yet. It seems that business owners are confronted with a never-ending set of challenges, and to make money in the current climate, good data, far more than good luck, is required.

In the current environment, and for a long while into the future, the divide between those who have data and those who don’t, is akin to a forecast about who will (and won’t) thrive, or even survive. While big data remains the province of large corporates and governments, real-time data is more accessible to SMEs than ever before.

This article also references the Xero Small Business Insights Report findings for July 2022.

Read the full article here »

At Allan Hall we’re experts in Xero – online accounting software that’s easy to use. Find out more about Xero here or drop us a line to get started. A better way to work – together with us, share access to your business numbers so everyone is up to speed. Xero accounting software lets you work anywhere.

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