S&P/ASX 200 Index (ASX: XJO) shares are now trading higher than where they were before the US reciprocal tariffs were announced.
Take a look at this chart, which captures the rollercoaster ride we ASX investors have been on since the start of last month.
US President Donald Trump announced the reciprocal tariffs in the US on 2 April.
In response, the ASX 200 began to fall on 3 April, with the benchmark index entering an official market correction on 4 April.
A market correction is when a major index falls 10% from its most recent peak. (ASX 200 shares hit a record high on 14 February.)
The ASX 200's slide continued through to the closing bell on 7 April, when the index finished 14.17% lower than that February high.
But just as quickly as the downturn came, so too did the rebound, fuelled by President Trump pumping the brakes on the tariff rollout.
As a result, ASX investors endured a turbulent period of trading last month but ultimately came out of it in the green.
On 2 April in Australia, ASX 200 shares closed at 7,934.5 points. President Trump then announced the US tariffs overnight our time.
On 30 April, the benchmark index closed at 8,126.2 points, up 2.4% since the tariffs were announced.
After all that upheaval, what's next for ASX 200 shares in May?
'Two options for investors', says Macquarie
Today, ASX 200 shares are sitting at 8,129.4 points, up 0.039% for the day so far.
In a new note published today, top broker Macquarie says there are two options, or views, for ASX 200 shares investors to consider.
Macquarie says:
The bullish view is peak tariff panic has passed and all manner of breadth thrusts say stocks climb the wall of worry.
The more negative view is we are near the top of a Bear Market Rally (BMR), PEs are still high and the economic hit from tariffs is still to come, and this drives earnings lower.
Macquarie is tipping the latter scenario.
In fact, the broker says trading this month could "test the April low", which was 7,343.3 points for ASX 200 shares on 7 April.
This implies a potential 9.5%-plus fall over the next month of trading.
The broker explains its base case scenario:
Trump has blinked more than once, reducing downside risks, but we see the fallout from tariffs (and weakening hard data) driving stocks to test the April low.
With US yields still high — negative for refinancings and housing – and emboldened by the rally, we suspect Trump makes another negative pivot to get the Fed to cut.
If stocks successfully test the low and rates are cut, it would be bullish.
What will you do?
If the market did return to its April low, what are ASX 200 shares investors likely to do?
It became clear very quickly during last month's volatility that many ASX investors were enthusiastically buying the dip.
So, perhaps investors will grab a second opportunity to buy low with both hands.
Data from the online trading platform Stake showed investors targeted ASX large-cap shares during the April sell-off.
The top 10 most traded stocks included blue-chip favourites BHP Group Ltd (ASX: BHP), Fortescue Metals Group Ltd (ASX: FMG), Commonwealth Bank of Australia (ASX: CBA), and Macquarie Group Ltd (ASX: MQG).
Which ASX 200 shares should you buy?
Macquarie says its Australian Strategy Portfolio, updated on 17 March, remains "relatively defensive".
The portfolio's holdings give us an insight into which ASX 200 shares Macquarie has the most confidence in.
The portfolio's key overweight positions are in health, consumer staples, and gold, as well as bond proxy stocks.
Its ASX 200 health shares include CSL Ltd (ASX: CSL), ResMed CDI (ASX: RMD), and Ramsay Health Care Ltd (ASX: RHC).
Staples holdings include Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW).
ASX 200 gold shares include Newmont Corporation CDI (ASX: NEM) and Northern Star Resources Ltd (ASX: NST).
The portfolio's bond proxy shares include Transurban Group (ASX: TCL), Telstra Group Ltd (ASX: TLS), and APA Group (ASX: APA).
Macquarie says it is also "modest overweight" in real estate investment trusts (REITs) in anticipation of further interest rate cuts.
Its holdings include Goodman Group (ASX: GMG), Mirvac Group (ASX: MGR), and GPT Group (ASX: GPT).
