Global equity markets surged overnight, with both the S&P 500 and Nasdaq closing at fresh all-time highs as investor sentiment was lifted by strong earnings results from Caterpillar and Alphabet and easing concerns around a potential US-Iran escalation. The Dow Jones added roughly 790 points, its strongest single-session gain in recent weeks, while the broader S&P 500 climbed just over 1%.

Meta and Microsoft both sold off meaningfully, falling 7% and 4% respectively, as markets digested the growing capital expenditure ambitions of Big Tech. Meta's latest guidance pointed to a significant increase in annual spending, compounded by softer-than-expected user growth. Microsoft told investors its capex bill is on track to hit $190 billion, driven largely by elevated memory costs tied to AI infrastructure buildout. The message from markets is clear: AI enthusiasm remains intact, but investors are increasingly scrutinising what it actually costs to build it.

Commentary from Industry Leaders

Citi Wealth's latest quarterly outlook reinforces a disciplined, theme-driven approach to portfolio construction - one built to withstand extreme shocks, transient drawdowns and inflationary periods. Their central message is that understanding the role each asset class plays is as important as the asset selection itself. Their framework organises the investment universe into three broad categories.

Growth-oriented assets are anchored in capital appreciation, with return drivers tied to positive or stable fundamentals at both the micro and macro level. Equities remain the cornerstone, with flexibility to rotate across sectors, market caps and geographies to dial growth exposure up or down. In private markets, equity-like assets seek returns through operational improvements, asset-level value creation and structural inefficiencies.

Income-oriented assets are designed to deliver stable, predictable cash flows. Citi Wealth flags a notable shift here - they have reduced public fixed income spread exposure for now, citing multi-year spread lows and the lock-up, gate and illiquidity risks associated with private credit. They continue to assess risk/reward across income-generating opportunities against a backdrop of elevated volatility and growing uncertainty.

Diversifying or uncorrelated assets - including shorter duration assets, commodities, real estate, infrastructure and industrials - play a critical role in capital preservation and inflation hedging. Unlike long-duration or growth assets, these holdings derive their value from intrinsic physical worth or real economic activity and capex cycles, making them more resilient in a stable, low-discount-rate environment.

Citi's overarching view: in environments where uncertainty is elevated, staying disciplined and anchored in sustainable fundamentals is more critical than ever.

Economic News

Australia's headline CPI is running at 4.6%, well above the RBA's 2-3% target. Further increases are expected as the Middle East energy shock continues to feed through to fuel, fertiliser and building material prices. The RBA's preferred trimmed mean measure came in at 3.5% for the March quarter, broadly in line with RBA forecasts, which is the only reason market pricing for a May hike pulled back slightly from 88% to around 75% following Wednesday's CPI release.

Many economists view the real odds as closer to 50-50, with a narrow split decision.

The risk sits offshore. One of the world's most important shipping routes, the Strait of Hormuz, is currently closed to the tankers that carry oil, gas, and fertiliser to countries like Australia. The longer that closure continues, the worse it gets for everyday Australians. Fuel stays expensive, groceries cost more and businesses face higher costs that eventually get passed on to consumers. If this drags on, Australia could be facing a recession by the end of the year. The RBA is now caught between two options: raise interest rates to fight inflation and risk pushing a slowing economy over the edge, or hold rates steady and risk inflation spiralling further out of control. Either way, there is no easy answer, and Tuesday's decision is effectively a coin toss.

Market Snapshot

• Australia: ASX rebounds from worst losing streak since 2018

• United States: Dow 1.6%, S&P 500 1.0%, Nasdaq 0.9%

• Bonds: US 10-year yield at 4.37%, Australian 10-year yield at 5.06%

• Gold: Declined overnight

Key Events Coming Up

• Tuesday 5 May: US Job Openings - a survey done by the US Bureau of Labor Statistics to help measure job vacancies

• Thursday 7 May: Initial Jobless Claims - measures the number of people who filed for unemployment insurance for the first time during the past week

Investment Update

Important Information - This opportunity is subject to due diligence. The following is provided for the purpose of gauging client interest only. Wholesale and sophisticated investors only.

We are currently reviewing an unlisted industrial property fund offering exposure to a fully developed, 100% leased core industrial portfolio located in Western Australia.

The portfolio comprises six modern assets spanning approximately 76,900 sqm of gross lettable area across strategically positioned industrial precincts in the Perth metro region, one of Australia's most supply-constrained industrial markets.

The fund is currently undertaking a recapitalisation, offering incoming investors the opportunity to acquire units at NAV in an already stabilised, income-generating portfolio, bypassing the development and lease-up risk typically associated with unlisted property funds at inception.

Highlights

• Portfolio Valuation: $183.5 million

• Leasing Status: 100% leased

• Weighted average lease expiry: ~9 years (by income)

• Target income Duration: 7.0% p.a. (average over 5 years)

• Target IRR (net of fees): 13.0%+

• Equity Multiple: 1.79x

• Investment Term: 5 years

• LVR: 47%

What Makes This Compelling

Stabilised, institutional-grade portfolio. The assets have been purpose-built and fully leased since inception, providing investors with immediate, day-one income from a portfolio that has already cleared development and leasing risk.

Exceptional tenant quality. The portfolio is anchored by a diversified mix of established Australian and global operators across resources, agriculture, infrastructure and advanced manufacturing. Tenants include ASX-listed companies, subsidiaries of major global corporations and government-backed operators, providing strong covenant strength across the lease book.

Long leases with embedded rent growth. With a ~9 year WALE and rent review structures including fixed increases of 3-3.5% and CPI-linked escalations, the income profile is highly predictable. Critically, a number of existing leases are currently below prevailing market rents, providing meaningful upside through rental reversions as market reviews are triggered over the investment term.

Perth industrial fundamentals are exceptional. Perth currently has the lowest industrial vacancy rate in Australia at 1.6%. Structural demand drivers including the AUKUS naval shipbuilding investment ($12 billion committed to Henderson/Rockingham), critical minerals infrastructure and defence-related logistics are expected to sustain tenant demand well beyond the fund's investment horizon. Supply constraints on the eastern seaboard mean Perth continues to attract disproportionate institutional interest.

Next Steps

If these opportunities interest you, please get in touch with us today and we can provide you with more information.