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Market Commentary: What happened in March 2024

Published on 10/04/2024


So what did March Madness bring? Another(!) record-breaking month for share markets in the US and a double-digit Year-to-Date (YTD) return for the S&P US 500 were among the highlights for the last month of the first quarter. The S&P 500, an index which measures the performance of the 500 largest US-listed companies, has now recorded five consecutive months of positive returns. With the next round of company earnings reports coming out in the next couple of weeks, it will be interesting to see if the US market can maintain this strong momentum.

Recent economic data shows the New Zealand economy continues to slow.  According to recent announcements, we entered a ‘technical’ recession at the end of 2023. A technical recession is when there are two consecutive quarters of negative real Gross Domestic Product (GDP) growth. A full-blown recession (which isn’t off the cards for NZ) is when there is a sustained period of subdued or negative GDP readings. Obviously not a good thing, but perhaps not as scary than the clickbait headlines you see, once you understand its true meaning.

New Zealand’s stock and bond markets had one of their better months in March, given the underperformance of both vs global peers over the past 12 months. The NZX 50 was up just over 3% and the Government Bond Index up just shy of 1.2% for the month. And while positive, and reasonably strong, compared to the US 500 and the still-going-gangbusters Japanese market (up another 3.7%), it doesn’t make for quite as exciting reading. It was only a handful of years ago our share market was a star performer; only time can tell whether we’ll see our day in the sun again.

Globally, fixed income (bond) returns were stronger in March which is a welcome relief after many months of subdued or negative returns. Central banks around the world are generally supportive of interest rate cuts this year as inflation concerns finally start to ease. Having said this, the commentary coming from the various bank Governors is trying to temper expectations around the speed of the expected cuts. Three interest rate cuts have been forecast in the US, with the first potentially in June. Closer to home, the Reserve Bank of NZ (RBNZ) is indicating cuts won’t be until late 2024 or early 2025 – but again, only time will tell.

So what can we take from all this mixed news? Like many of our friends in the financial industry say, there really isn’t a crystal ball which can tell us what’ll happen next. And that applies to whether we’ll continue to stay in recession, whether the US share market will continue its bullish run, or if the share market will see a return to those golden days. We don’t believe in trying to time the markets or treating investing as a short-term game. The best way to build your financial future is to stay the course, and invest for the long-term.