Monthly Market Wrap: Tariff turmoil rocked markets in April – and it’s still not over yet

Date: May 2, 2025

• The Straits Times Index plunged from the 4,000 level to as low as 3,393 after US tariffs were announced
• The index recovered after 90-day tariff pause was announced to finish at 3,832.51, 3.5% down for the month
• Markets are all now in wait-and-see mode
• US Treasury bond yields spiked up, probably prompting tariff pause
• Analysts downgraded the banking sector
• Privatisation offer for Sinarmas Land is not fair but reasonable: IFA
• Retail investors were net buyers in April; STI consensus target is 4,210: SGX Research

 

The STI touched 4,000 at the end of March but headed south thereafter

US President Donald Trump’s plans for broad 10% tariffs paired with higher rates for many key trade partners such as China, Canada and Mexico caught Wall Street off guard when they were announced in early April.

With recession and inflation fears spiking upwards, US stocks crashed, with the Dow Jones Industrial Average, S&P 500 and Nasdaq Composite plunging 7.9%, 9.1% and 10% respectively in the first week of the month.

The Straits Times Index in the meantime, lost 3.7% at 3,825 in the first week, plummeting just a few days after it touched the historic 4,000 mark in intraday trading on 28 March.

The fallout in the second week was worse, with the STI collapsing a further 8.2%, led – not surprisingly – by the three banks. The lowest point for the month came on 9 April, when a 2.18% drop took the index down to 3,393.69 – a 607 points or 15% loss from the 4,000 level in seven trading sessions.

As the month progressed and most likely because of huge pressure on US Treasury bonds, Trump blinked and allowed a 90-day tariff reprieve for most countries except for China.

This led to a rebound because of hopes that there will be fruitful negotiations during the reprieve period, though there was a wobble in the third week after Trump threatened to sack US Federal Reserve chief Jerome Powell for not cutting interest rates.

In the fourth week the absence of any negative tariff news – as opposed to the presence of positive news – and a pause in the criticism of Powell helped stretch the rebound, albeit in lower volume as far as the local stock market was concerned.

For the month, the Straits Times Index lost about 140 points or 3.5% at 3,832.51.

Over on Wall Street, the Dow Jones Industrial Average was down 2.2% for the month, the S&P 500 lost 0.2% and the Nasdaq Composite Index rose 0.7%.

Everyone is in wait-and-see mode

Stock markets find themselves holding their breath now, waiting to see whether Trump’s tariff policy will cause a recession or whether the US can still emerge relatively unscathed.

However, even though Trump has scaled back the tariff and Powell rhetoric, the reality is that his next Truth Social post could send stocks lower. And investors are still waiting to see what damage has already been done by the will-he-or-won’t-he nature of trade policy.

As things stand, it could go either way. US prediction market Polymarket puts the chances of a U.S. recession at 55%, and that seems about right, which means picking a direction, either direction, is probably no better than a coin flip.

“In the very short term, the equity pain trade likely remains to the upside as the market pre-positions on tariff de-escalation,” JP Morgan strategist Dubravko Lakos-Bujas was quoted as saying by US financial newspaper Barron’s.

“However, as the summer approaches, we could start to see some softness in activity due to aggressive tariff-related front-loading, lagged effects of other policies, and lower business investment activity’’.

“U.S. equities are coming off a volatile month driven by policy uncertainty,” said Rosenberg Research’s David Rosenberg.

“This volatility is news-driven as policymaking on the fly remains the hallmark of the current government. We expect the uncertainty to continue, making investing in equities a difficult exercise as markets succumb to ‘headline roulette.’”

What happened in the US Treasury bond market

As the Trump administration’s reciprocal tariffs were announced on 2 April, the bond prices slid and the yield on 2-year Treasury notes rose by as much as 0.3 percentage points, marking the biggest intraday move since 2009, according to financial data firm FactSet.

“Why is this happening? Fixed-income investors may be starting to worry that the Chinese and other foreigners might start selling their U.S. Treasuries,” economist Ed Yardeni said in an April 8 research note.

While the stock market plunge hurt millions of Americans’ retirement savings, the turmoil in the bond market creates very real pressures on the nation’s finances.

Because the Treasury Department pays interest to debt holders, any increase in yields puts more financial strain on the nation’s coffers.

“Developments in the last 24 hours suggest we may be headed for serious financial crisis wholly induced by U.S. government tariff policy,” Harvard University economist and former Treasury Secretary Lawrence Summers said in an April 9 thread on social media.

Some Trump administration officials acknowledged that the bond market’s hostile reaction to the tariffs influenced the decision to pause the tariffs. “The bond market was telling us, ‘Hey, it is probably time to move,'” White House National Economic Council Director Kevin Hassett said on CNBC.

Analysts downgraded the banking sector

UOB-Kay Hian downgraded DBS to “sell’’ cutting its target from S$49.80 to S$40 and maintained a “hold’’ on OCBC while reducing the target price from S$21.10 to S$16.85.

The broker cut its net profit forecasts for DBS and OCBC by 13%, citing lower loan growth and higher credit costs due to non-performing loans in the manufacturing sector, particularly within Asean.

DBS Group Research downgraded UOB from “buy’’ to “hold’’ whilst cutting the target price from S$38.50 to S$32.70 while OCBC’s “hold’’ was maintained albeit with a reduction in target price from S$17.60 to S$14.40.

DBS, UOB and OCBC finished the month at S$42.45, S$34.64 and S$16.15 respectively.

Privatisation offer for Sinarmas Land is not fair but reasonable: IFA

W Capital Markets, the independent financial adviser for the privatisation of Sinarmas Land said that the S$0.31 per share offer tabled on March 27 is not fair but reasonable.

W Capital Markets, using a sum-of-the-parts valuation methodology, figures that Sinarmas Land is worth between S$0.35 and S$0.361 per share, higher than the S$0.31 offer. As such, this offer is “not fair”.

However, W Capital Markets notes that the offer price is at a premium of approximately 16.5%, 0.5%, 5.6% and 17.1% to the volume-weighted average price of Sinarmas Land shares for the 12-month, 6-month, 3-month and 1-month periods prior to the offer.

The IFA points out that for the 12-month period prior to the offer being announced, Sinarmas Land shares were traded on 243 market days out of a total of 250 market days, and that the average daily trading volume was just 0.55 million shares, equivalent to just 0.04% of the free float.

The IFA notes that there’s no competing offer other than that already tabled by the Widjaja family, who already control more than 70.3% of the shares.

“The likelihood of competing offers is remote,” says W Capital Markets. “After having carefully considered the factors above, we are of the opinion that the offer is ‘reasonable’.”

Retail investors were net buyers in April; STI target is 4,210: SGX Research

In a 24 April Market Update, SGX Research reported that retail investors emerged as strong net buyers amid the sharp declines early in the month, purchasing S$1.165 billion in Singapore stocks in April through April 9, and continued to be net buyers for the three successive sessions through April 14.

“Since April 14, retail investors have net sold S$253 million in Singapore stocks.

The retail net buying was primarily driven by DBS, OCBC and UOB’’ said SGX Research.

“The potential impacts of recent global trade policy announcements have led to a 3.4% reduction in the Bloomberg 12M Consensus Estimate Target Price (CETP) for the STI, from approximately 4,360 to around 4,210. This puts the STI at 10% below its current CETP, and for context, the STI has on average traded 11% below its CETP over the past year’’ noted SGX Research.

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