Portfolios in March saw further improvement in global investor sentiment as fears of a recession faded due to better news on key economic data and some stability returning to the oil market. Equities recorded a positive return for the month, with emerging equity markets outperforming particularly well after their recent difficult months. The normal monthly graph looks significantly different to the 3 month equivalent for the first quarter of the year and as such we have included the latter for a better perspective. US equities for example have now achieved a moderate return of 1.18% for the quarter but this is due to a strong rebound of over 6% in March. This is a poignant reminder that when we take into account a minimum 5 year time horizon the graphs are merely snapshots of a point in time.
In the US, there were further signs of labour market strength and some welcome improvement in the pace of manufacturing activity. Core inflation also continued to edge higher. However, the Federal Reserve again reiterated its preference to move cautiously with further interest rate increases. This inevitably undermined the US$ and resulted in speculative trading and volatility.
There were also encouraging signs of improving economic conditions in China, with the manufacturing index rising to its best level since June 2014. This reflects the impact of further monetary and fiscal stimulus from the Chinese authorities in recent months.