Investment Market Update
MARCH 2024
What developments have unfolded in local and global markets throughout the month of March?
KEY NUMBERS
4 Years
Since Covid Lockdown Started in SA
8
Days without loadshedding in Q1 2024
22
Times the S&P has closed at a record high this year
EXCHANGE RATES
EMERGING MARKET EXCHANGE RATE VS US DOLLAR
ANALYTICS EMERGING MARKET CURRENCY AND EM COMMODITY CURRENCY INDEX VS RAND/US DOLLAR
VOLATILITY RAND/US DOLLAR
GLOBAL MARKET
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Global stock markets have seen a strong start to the year, marking the best opening quarter in five years. March was particularly positive, witnessing growth across all regions, and notably, Japan’s central bank raised its policy rate into positive territory, marking the end of negative interest rates.
Europe led the way with a notable 3.5% increase, supported by favorable inflation data and an optimistic macroeconomic outlook. In the US, the resilient economy postponed rate cuts, while inflation figures exceeded expectations in January and February. Asian and Emerging Markets also saw positive returns, with China’s equities rebounding and offsetting negative reports from major players like Alibaba.
Despite broadly neutral economic news globally, equity markets continued their upward trend, supported by optimism regarding a recession. Fixed income returns remained solid, though not exceptional. Global inflation remained stable or decreased as anticipated, and business sentiment improved overall. However, risks persist, prompting central banks to exercise caution in adjusting interest rates. During the month, the UK, US, and Euro Area maintained their existing interest rates.
The release of US consumer inflation data for March 2024 has heightened uncertainty about future US interest rates. There’s now a greater risk that rates will need to remain unchanged for an extended period to address rising inflation. Prior to this data, there was an expectation that rate cuts would begin in June 2024. However, with inflation unexpectedly accelerating to 3.5% year-on-year for the third consecutive month, the Fed may need to reassess. This shift in sentiment has led to a stronger Dollar and increased global risk aversion.
SMARTIE BOX IN RANDS:
LOCAL MARKETS
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South African stocks saw a notable rebound, bolstered by a stronger Rand and a surge in resources. However, this resurgence seems to be influenced by external factors, notably an uptick in productivity in China’s manufacturing sector.
Domestically, bonds faced selling pressure, resulting in their highest yields in over five months, with yields rising across the curve, particularly in longer maturities, leading to a decline in bond prices.
The South African Reserve Bank opted to maintain the repo rate unchanged, citing risks stemming from elevated food and fuel prices. Despite challenges, the South African economy avoided recession, with growth projected to accelerate in 2024.
South African equities significantly outperformed their global counterparts, emerging as the top-performing asset class for local investors. Globally, asset classes encountered currency headwinds as the Rand gained support and strengthened throughout the month. While local property softened, global property exhibited better performance despite the Rand’s strength.
MOVEMENTS
- The JSE All Share Index jumped higher for the first time this year (up 3.2%).
- Financials (down 3.4%) ended deep in the negative, as Industrials (up 2.6%) grew, and Resources (up 12.8%) rocketed higher.
- Small-caps (down 0.7%) dipped into the red, while Mid-caps (up 2.3%) and Large-caps (up 3.8%) all ended the month in positive territory.
- Both the S&P SA REIT sector (down 1.4%) and the SA Listed Property sector (down 1.0%) fell over the course of the month.
- SA Nominal Bonds (down 2.0%) had a poor month, and Inflation Linked Bonds (up 0.3%) ended slightly higher.
- Developed Market Equities outperformed their Emerging Market peers in US Dollar terms, with the MSCI World Index up 3.2% and the MSCI Emerging Market Index having gained 2.2%.
- The Rand strengthened in March, appreciating against the major currencies; relative to the US Dollar (Rand appreciated 1.3%), the Euro (Rand appreciated 1.5%) and the Pound Sterling (Rand appreciated 1.4%).
- The commodities boasted strong performance, as Gold (up 8.4%) soared higher, Platinum (up 3.2%) bounced up and Brent Crude (up 4.6%) continued to increase.
MONTHLY RETURNS:
