Bumpy start to the quarter
Following on from two very strong quarters for investors in risk assets, the start of the second quarter has seen a sudden change of mood, and the first distinct bout of equity volatility this year.
Indeed, last Thursday, the American leading stock market index, the S&P 500 had the largest one-day percentage range (high/low) in over a year. The last major hiccup was when the US regional bank SVB fell in March 2023. The banking problems back then elicited an infusion of liquidity from the US central bank, the Federal Reserve (Fed), which not only helped stabilise markets but actually fed the next stage of the rally.
Oil breaking higher
Oil prices have leapt up. In commentary last week, the most prominent explanation has been the escalation of hostilities in Ukraine and the Middle East, which threaten to disrupt global supplies.
However, price momentum has been building for some time. Supply is constrained and, in line with a resilient global economy, oil demand has also proved more resilient than expected. This has resulted in an impressive but underappreciated rally: Brent (Brent crude oil is the most traded and its price used as a benchmark) is up more than 17% year-to-date. At the time of writing, Europe’s Brent is sitting just above $91 per barrel, and the US’ WTI is above $86
March 2024 asset returns review
Springtime for investors; March was another strong one in capital markets. Global stocks gained 3.3% in sterling terms, supported by a strengthening of corporate earnings and a continued softening from central banks. The rally was broad based too, with virtually all major stock markets getting a fair share of the joy. Last month’s sunny spell caps off an overwhelmingly positive first quarter of the year. Global equities jumped 9.2% over the first three months of 2024 in sterling terms. The table below shows the monthly and quarterly returns for major regions and asset classes in full, as well as some longer term annualised return perspectives.