In our latest update, we focus on key market activity from March which marks the end of a strong first quarter for 2024. With this, it brings hope and sets a positive tone for investors moving forward into the rest of the year.

Global Equities continued to power ahead in March, capping off a stellar first quarter for investors. The message from Central Banks was that the economy, and inflation, were on the right track to lower interest rates in time and ease the cost of borrowing over 2024. Equities in Europe and the US, bitcoin, and gold reached all-time valuation highs in March.

Here in the UK, the FTSE 100 fell just shy of the 8,000 mark (a symbolic threshold) but still closed March off at a 12-month high thanks to positive economic data. We saw GDP rise slightly by 0.2% in January, boosting hopes of growth following the technical recession at the end of last year. Inflation data for February came in below market expectation at 3.4%, the lowest inflation figure since September 2021, and we subsequently witnessed the Bank of England elect to hold interest rates at 5.25% for the fifth consecutive month.

At the start of the month, the Chancellor of the Exchequer delivered his Spring Budget which was relatively quiet (in comparison to other years). The headline announcement was another National Insurance Contribution rate cut to be implemented in the 2024/25 tax year, but there were also changes announced for Capital Gains Tax on second properties, Child Benefit entitlement, ISAs and Holiday Lettings. You can read more about these in our Spring Budget Summary Guide here. 

US stock markets continued to rise higher with the hopes that AI will bring about a wave of increased efficiency and greater corporate profits as seen by the huge gains achieved by a select cohort of tech stocks. For example, the S&P 500 index rose (3.2%) for a fifth consecutive month closing the month at yet another record high. This was supported by superb corporate earnings growth in 2024, coupled with a more positive economic outlook. The US Fed reiterated its plans to loosen monetary policy this year despite higher-than-expected inflation of 3.2% (year-on-year), up from 3.1% in January.

The European Central Bank is predicted to be the first major Central Bank to cut interest rates this year and the ECB suggested it may be in a position to do so as early as June. Switzerland only strengthens this belief with a surprise 25 basis point cut in March.

European markets reached all-time highs, following a strong Q1 performance and further gains over the month. Resilient economic data, a decent earnings season and the onset of interest rate cuts boosted ‘soft landing scenario’ expectations.

Japanese equities continued their strong rally into March and have now delivered a return of 10.5% YTD (year-to-date), and the Bank of Japan raised interest rates into positive territory for the first time in 17 years. Could this finally be an indication the long battle against deflation, created by the infamous 1980’s equity and property bubble, is finally being won?

In line with other Global Equities, Emerging Markets ended the month higher with the MSCI Emerging Markets index up 0.9%. However, Latin America continued to struggle and, in particular, Brazilian equities fell by 4% in March. Chinese stock markets rose cautiously over the month as the economy continues to be undermined by the heavily indebted property sector without meaningful state intervention. Official data released showed the world’s second largest economy still managed to grow.

Overall, March was another terrific month for investors and we hope markets can continue to edge higher over the course of 2024 as the economic environment becomes more accommodative. Whilst geopolitical and inflationary risks remain the underlying corporate earnings data and consumer confidence remains positive.

If you would like to discuss your investment opportunities with an Independent Financial Adviser, please do not hesitate to get in touch on 01463 242242.

Author: Douglas Sims, Independent Financial Adviser, Integrity365

Published: 19th April 2024