March, better late than never
March was a good month for equities, with the JSE All Share returning 5.7%, bringing the year to date return in at 3.1%, mostly following major global markets. The performance catalysts can be traced to several market-moving events, with the most notable being the US Fed’s policy statement and the European Central Bank’s rate cut in March.
At its second meeting held on the 16th of March the US Fed decided to keep interest rates unchanged at 0.5%, further stating that it will assess realized and expected economic conditions relative to its objectives of maximum employment and a 2% inflation target. Excerpts from the FOMC Statement:“Information received since the Federal Open Market Committee met in January suggests that economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months.
A range of recent indicators, including strong job gains, points to additional strengthening of the labour market.” The FOMC further stated that global economic and financial developments continue to pose risks and inflation remains below the committee’s 2% long-run objective. This contrasts with the South African Reserve Bank’s decision to raise interest rates by 25bps to 7%, which is now 125bps (1.25%) higher than a year ago. Policymakers voiced concerns over growing inflationary pressure despite a worsening growth outlook. Previous rate hikes did not do much to prevent a rise in inflation, which in February reached a 21-month high of 8.1%, outside its target band of 3-6%.