Economic market update

Global equity markets were strong across most regions during March. Growth in the US and emerging signs of improvement across other regions supported investor expectations of the corporate earnings outlook.

United States

In the US, the market continued upward, with the S&P 500 rising 3.2%. This rise was marked by expansion beyond the usual tech giants, with sectors like Energy, Financials, and Utilities outperforming the Technology sector.

The US Federal Reserve held policy rates steady at their March meeting. This showed their cautious approach to future adjustments, and their consideration of solid growth and persistent inflation.

Europe and the UK

In Europe, the MSCI AC Europe index rose 3.6%.

The UK market also gained, supported by those sectors which are expected to benefit from anticipated Bank of England policy rate reductions.

China and Emerging Markets

Emerging Market equities were positive, with the MSCI Emerging Market index rising by 2.3%.

Chinese equities were positive for March, although investors are still sceptical about China’s growth prospects, given the ongoing challenges linked to property market stress and weak consumer confidence.

Asia and Japan

In Asia, Taiwanese stocks led the market, increasing by 9.3%. This was driven by sentiments towards AI.

Japan’s Nikkei 225 index crossed the 40,000 threshold for the first time in its history; investor attitude has improved towards the Japanese market in the last 12 months. Also, the Bank of Japan raised interest rates for the first time in nearly 2 decades, moving away from its long-established negative interest rate policy.

Australia

The Australian equity market was positive. The ASX 300 rose by 3.3% in March. The Real Estate and Energy sectors were strongest.

The Reserve Bank of Australia retained a neutral policy outlook and has shown caution regarding future rate reductions.

Currency and Bonds

Expectations of an upcoming rate-cut cycle may have influenced a drop in long-term bond yields. The Australian Government 10-Year Bond Yield fell by 17 bps to 3.97%, and the US Government 10-Year Bond Yield remained relatively steady at 4.20%.

The Australian dollar strengthened over the month against major currencies, appreciating against the Euro (+0.4%), Japanese Yen (+1.3%), and New Zealand Dollar (+2.1%).

Read the Market Commentary for February 2024.