When it came to March performance, investment markets were spooked by President Trump’s tariff roller coaster. Gold, often considered a safe haven asset during times of great uncertainty, reached another record high. With the tariffs potentially coming into effect in April (depending on how negotiations go), we will very likely see the continuation of the current volatility for the near future.

When it came to local market performance, the NZ share market was down around 3% for the month, and -7% for the quarter.  Even though we sit more isolated at the bottom of the world we are not immune to the global market movements. 

The University of Michigan Consumer Confidence survey (a monthly survey of consumer confidence levels in the US) reported a score of 57, which was well below the previous month of 64.7. US consumers are less confident about job security, and this is flowing through to decreased spending vs increased saving. Against a backdrop of trade wars, immigration crackdowns and weaker Q4 GDP, US Federal Reserve officials have downgraded their US growth outlook and increased inflation expectations. This move effectively delays any rate cuts and the ultimate drive back to a 2% inflation target.

The US share market (represented by the S&P 500 index) finished March down 5.75% for the month and down 4.6% for Q1 2025. Interestingly if you remove the ‘Magnificent 7’, then the returns improve to -2.59% and +0.5% respectively. This highlights the strong underperformance of the previously favourite tech stocks in the current market. 

Across the Atlantic, European share markets saw upswings in relative performance off the back of the US market challenges. One of the drivers behind the switch is because the forward-looking price to earnings (P/E) multiple for European shares is more favourable than their US counterparts. Germany introduced some new fiscal initiatives including a significant €500 billion infrastructure investment fund. They also opened up potential defence spend by the government. This stimulus package is a double-edged sword, on one side it stimulates economic growth, but it comes at the cost of increasing debt.

The European Central Bank (ECB) cut their rate to 2.5% (a 0.25% drop) and indicated another rate cut was imminent. Bank of Canada also cut rates by 0.25%, the 7th consecutive rate cut their central bank has made. Bank of Japan (BoJ), Reserve Bank of Australia (RBA) and Bank of England (BoE) all cited continued market uncertainty as reasons not to cut interest rates at this point.

Earlier in the month the Reserve Bank of New Zealand (RBNZ) Governor, Adrian Orr, resigned and left the building immediately. Orr’s shock departure took the market by surprise and Deputy Governor Christian Hawkesby stepped up to fill the sudden void until a new Governor can be appointed. There is an Official Cash Rate (OCR) review due on 9th April and another 0.25% cut is widely expected - some banks are even advocating for a 0.5% cut given tough economic conditions.

The NZ government bond index was relatively flat in March but up quite strongly over the last three months. With the continued uncertainty in share markets, existing bond holders who have been through months of pain could be potential benefactors alongside those who already held gold. 

The moral of the story through all these crazy times and volatility? Markets and asset classes all go up and down but are impossible to predict, which is one of the reasons it's important to remain diversified. It's also wise to keep a long-term perspective if you're not planning to withdraw your investments in the near term - that way you can keep calm and carry on, knowing you're building your financial future in a smart and sustainable manner!

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