Market Update – March 2024
Financial markets continued their positive trajectory in March 2024. The MSCI World Index gained 3.1%, reflecting broad-based strength across developed markets. The S&P 500 also saw a 3.1% return, despite some weakness in tech. Quality as a factor returned around 2.6% (up nearly 17% for the quarter) but was over-shadowed by Value, delivering 5.6%. Japan’s Nikkei 225 increased 2.8% while the ASX 200 mirrored much of the global strength, up 2.6%.
Specific to Australian equities, resources and small-cap stocks (again driven by value) outperformed the broader market. Commodities were topical as Gold prices surged an impressive 7.2%, while oil prices rose over 6% due to ongoing geopolitical tensions and production cuts by OPEC+.
The continued global optimism is being fuelled by resilient economies, strong corporate profits, and a belief that central banks will blink and shift towards lower interest rates this year. Yields on 10-year US Treasuries touched 4% briefly before moving higher and finishing the month at 4.2%. Although well flagged, the Bank of Japan ended their 8 year experiment of negative interest rates, shifting the band to 0-0.1% with Governor Kazuo sighting rising wages and prices as the justification.
Looking ahead, we retain our view that market expectations of any rate cut quantum and timeline are too aggressive. Inflation continues to persist in most major economies, driven in services, and now underwritten by wage rise agreements that are anywhere from 3 to 5 years in duration. Governments continue to spend money attempting to appease swing voters in addition to energy transition challenges.
Disclaimer
The contents of this publication are only intended to provide a summary and general overview of matters of interest in the financial markets and in the economy and are distributed in order to promote broad discussion. The publication does not constitute investment or financial product advice, it does not constitute an offer or invitation to purchase a financial product or financial service, nor does it of itself create a client-financial adviser relationship. To the extent that any part of the contents of this publication may be said to constitute “general advice” we warn you not to act on any matter referred to in this publication without first seeking qualified financial product advice appropriate to your particular circumstances, needs and objectives before acting or relying on any content in this publication. TWD Licensee Services Pty Ltd (ABN 88 605 064 480 – AFSL 475964) makes no warranties or representations about the accuracy or completeness of the content of this publication, and excludes, to the maximum extent permissible by law, any liability which may arise as a result of the use of the content of this publication.