Positive global equity momentum carried into March, with a fifth consecutive positive month for global stocks (MSCI World Index +3.3% MoM), which saw the MSCI World rally 25% in the past five months. Mega-cap US tech stocks had been the main driver of recent equity market performance, but the rally broadened to other sectors in March as the S&P 500 Energy (+11% MoM) and Financials (+5% MoM) sectors were amongst the star performers for the month. The paths for the mega-cap tech stocks saw some divergence in March as Nvidia, which finds itself at the forefront of AI chip design, continued to attract investors, rallying 14% MoM to leave it 82% higher YTD (after rallying 240% in 2023). Google’s holding company, Alphabet (+9% MoM), also rallied in March as it announced plans to roll out its AI technology across various parts of the healthcare sector, including plans to improve screening for cancer and other diseases.
Tesla’s recent disappointing share price performance continued into March (-13% MoM/-29% YTD) as its announcement of slumping shipments from its Shanghai facility amidst waning Chinese demand added to the company’s recent woes. Apple also experienced a tough March (-5% MoM), starting the month with the announcement that it would abandon its decade-long foray into electric cars days before European regulators levied a US$2bn fine on the company for unfair treatment of music-streaming apps. The regulatory pressure on Apple ramped up further mid-month when the US Department of Justice (DOJ) added to European regulatory scrutiny of Apple with the filing of US antitrust suits against the tech giant.
Emerging market (EM) stocks lagged their developed market (DM) peers in March (MSCI EM +2.5% MoM), with the semiconductor sector (+10% MoM in aggregate) contributing c. 1.5% to the monthly performance.
As expected, the European and US central banks kept rates on hold at their March meetings, and US 10-year government bond yields held above 4% p.a. during the month (as they have done for most of the past eight months) as investors pared back expectations for imminent rate cuts. Stronger-than-anticipated US producer and consumer inflation data in March reinforced the US Federal Reserve’s messaging that the battle against inflation was far from over and that rates would need to remain elevated for longer. Brent crude oil (+4.6% MoM/+14% YTD) continued to drift higher with support from geopolitical factors, including increased enforcement of Russian sanctions, Ukrainian drones targeting Russian refineries, Houthis still causing disruptions to key Red Sea shipping routes and ongoing conflict in the Middle East.
