Equity markets: strong rebound in the second half of the month
U.S. stocks ended, in March, 4.5% higher in euro terms. European equities, which had fallen sharply at the beginning of the month, closed virtually unchanged in March. The market's rebound from the middle of the month can be attributed to progress in negotiations between Russia and Ukraine and the Europeans' refusal to include the energy sector in sanctions against Moscow. Ceasefire talks have had ups and downs, with two face-to-face meetings in Turkey initially generating optimism that quickly faded. Ukraine seemed willing to negotiate on its neutrality and non-membership in NATO but consistently rejected the idea of territorial concessions. At the same time, Russia appears to have scaled back its war aims and is preparing to focus its efforts on separatist areas in the Donbass region.
In March, the energy sector outperformed the oil sector, while companies active in material extraction received a boost from the strength of industrial metals. In addition, the automotive industry did exceptionally well in the consumer goods sector. Equities rose in March despite the Fed's expected monetary tightening and expectations that its pace will accelerate in the coming months. Inflation remained a key concern, as the February U.S. Inflation Report showed that 12-month inflation rose 7.9% - the fastest pace since 1982. Although the prospect of a rapid tightening by the Fed is fueling fears of recession (and the rapid flattening of the yield curve and reversals of the order of key segments are not helping), the labor market proved resilient: February non-farm employment exceeded expectations and average hourly wages held steady month-on-month.
|MSCI EMU NR||-0.7%||-9.2%||-9.2%||1.8%|
|MSCI EUROPE NR||0.8%||-5.3%||-5.3%||9.3%|
|MSCI USA NR||4.5%||-3.2%||-3.2%||20.0%|
|MSCI JAPAN NR||0.4%||-4.5%||-4.5%||-1.2%|
|MSCI EM. MARKETS NR||-1.3%||-4.9%||-4.9%||-6.4%|
|MSCI AC WORLD NR||-3.1%||-3.3%||-3.3%||13.3%|