Donald Trump’s sharemarket bloodbath hits Australians’ savings

A bloodbath on global sharemarkets sparked by US President Donald Trump’s universal tariffs has so far wiped 4.5 per cent off Australians’ retirement savings, as economists predict equity prices will fall further.

Financial markets have been in turmoil since Trump unveiled last week his so-called “Liberation Day” policies that imposed taxes of between 10 per cent and 50 per cent on imports into the US from almost every single country, with the S&P/ASX 200 tumbling 7.5 per cent over the past three trading days.

Liberation Day, or should it be “liquidation day”? Donald Trump’s sweeping tariffs have hit workers’ savings. Credit: AP

Australian workers’ superannuation balances are down 4.5 per cent since April 1, according to a SuperRatings analysis. AMP chief economist Shane Oliver, who also works closely with the financial service’s portfolio management team, said retirees and people close to retirement age would be feeling the biggest hit.

“If sharemarket falls happen early on in their career, suddenly the dollar amount they’re putting in can buy them more shares, so it can turn out to be an OK thing [for younger people] from a longer-term perspective,” Oliver said.

“But for those cohorts who are close to retirement or in retirement, it’s more of an issue because it’s harder to make up the falls.”

Oliver said AMP had already reduced its exposure to US equities in February, but, like many investment chiefs in Australia’s $4.2 trillion superannuation industry, it would be considering when to re-enter the market.

Aware Super told Bloomberg it was already planning to buy cheaper stocks and capitalise on the global turmoil. Oliver said the team at AMP was awaiting further signs the market had bottomed out, as well as greater indication from the Trump administration that it was negotiating on tariffs.

Investment chiefs will be closely watching whether countries will announce retaliatory tariffs, as China did on Friday, and whether the US will end up counter-retaliating, as well as hints from the US Federal Reserve on cutting the cash rate.

Local markets have priced in an 82 per cent chance the Reserve Bank of Australia will cut the cash rate from 4.1 per cent to 3.85 per cent at its May 20 meeting, and a further three times after that, as economists predict Trump’s tariffs will trigger a global economic slowdown.

“We need to see the nature of any bounce-back from here, and maybe some signs Trump is getting ready to negotiate,” Oliver said. “Fifty countries have reportedly expressed a desire to negotiate … but it’s still too early to tell. It’s like trying to catch a falling knife.”

Although the S&P 500 is down 17 per cent on its two-year peak, according to Oliver’s analysis, the rout is nowhere near as bad as the global financial crisis, when the market crashed 57 per cent, or even during the COVID-19 pandemic, when the bourse tumbled 34 per cent.

Locally, the S&P/ASX 200 fell 15 per cent on the back of “Liberation Day”, compared with 37 per cent during the pandemic and 55 per cent in the global financial crisis.

Gordon Jagger, a self-funded retiree based in Sydney, said he was concerned about the recent falls in markets but was not giving up hope, having thought for some time that a market downturn was inevitable.

“I think equity markets have been overvalued for some time, particularly in the US, and I’ve been thinking that I don’t want to be exposed to US markets if I can help it,” he said. “It was just a matter of when it was going to happen, and [Trump’s tariffs move] has been the needle that’s burst the balloon.”

Retiree Gordon Jagger had repositioned his super to have less exposure to US equities some months ago.Credit: Wolter Peeters

The former accountant said he had repositioned his superannuation to have less exposure to equities some months ago, anticipating an impending crash, but noted the fall would still hurt his retirement savings. He said he would not take any further action with his super and was happy to just ride it out.

“Trump’s actions are unfathomable to anyone who’s rational,” Jagger said. “How this is going to play out you just can’t predict because predictions are based on logic, and logic doesn’t factor into this any more.”

UniSuper chief investment officer John Pearce, providing an update on the fund’s podcast, said while the international shares option was down “close to double digits” since the start of the year, the default balanced down was 3.5 per cent down.

“I’m at the moment leaning on the side this [economic impact] is going to be drawn out,” Pearce said.

Super Consumers Australia chief Xavier O’Halloran said workers should think of superannuation as a long-term commitment.

“We see peaks and highs like this in the market all the time,” O’Halloran said. “It’s not completely pandemonium ... Trying to time the market is a really fraught exercise for people. No one knows what’s going to happen next.”

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