Monthly Market News March 2024 – Trends in the markets

Alexandre Gauthy - Economist

Equity markets continued their upward trend in March. The technology sector underperformed the broad market, while the energy sector was the best performer for the month.

Our expert Alexandre Gauthy analyses the trends in the markets in March 2024.

Equity markets: prices continue to rise in March

In March, global equities rose by 2.9% in euro terms. In common currency, European equities (+3.5%) and US equities (+3.1%) outperformed other regions, including Japan (+2%) and emerging market equities (+1.9%). The S&P 500 posted its fifth consecutive monthly gain in March, ending higher for the tenth month in the last thirteen and setting several new records along the way. The month was notably marked by positive developments in sectors other than the technology sector. The equal-weighted S&P 500 Index outperformed the S&P 500 Index for the month. Big U.S. tech companies were mostly up.

Economic data released during the month continued to support the thesis of a soft landing or even a no-landing for the US economy. February's jobs report showed 275,000 jobs created in the U.S., well above the consensus of 200,000. That said, a significant downward revision to the January report kept the labour market cooling theme alive. On the other hand, consumer spending rebounded by 0.4% in February after a slight decline in January due to an unfavourable weather effect.

Equity markets continued to be torn between the bulls and the bears. The “optimists” are highlighting that the disinflation thesis remains firmly entrenched, that the Fed will start cutting rates as early as June, and that corporate earnings remain robust. In the bear camp, we note that a first rate cut by the Fed in June is not a foregone conclusion and that the strong rise in equity markets since the beginning of the year continues to raise fears of overbought conditions.

Bond markets: positive returns

Developed countries government bond prices generally appreciated in March. In the U.S., yields fell on most maturities, despite a rise ahead of the Fed meeting of March 20th.

Central banks: a little more patience before rate cuts

The major event of the month was the Fed meeting. The latter kept rates unchanged (as expected). The median forecast of policymakers remains 3 rate cuts of 0.25% for 2024. In the end, Powell's speech following the Fed meeting was relatively constructive, with Powell arguing that recent inflation data did not fundamentally alter the story of disinflation.

A week earlier, the European Central Bank decided to leave rates unchanged. Officials are moving closer to easing monetary policy but want to see more evidence that wage growth and core inflation are slowing before they start cutting interest rates. The ECB left the door open for a first rate cut in April, although the most likely start date remains June.

Currencies: depreciation of the Swiss franc

The dollar was virtually unchanged against the euro in March but appreciated against the yen (which at one point reached its weakest level since 1990 against the dollar). The Swiss franc depreciated as a result of the Swiss National Bank's rate cut decision, which was not fully priced in by the markets.

Raw materials: rising prices

The price of cocoa continued to surge in March, adding 61% to the 27% increase in February. The price of cocoa has more than doubled since the beginning of the year. Industrial metals rose on the month, mainly due to better news on the Chinese economy and the U.S. property sector. The price of gold continued to rise, ending the month at +8.9% and posting a new all-time high. Finally, the price of oil has been sustained by geopolitical uncertainty and drone attacks on Russian oil refining infrastructure.

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