Introduction

March 2024 marked the end of a strong first quarter for global markets. Equities and bonds both advanced as investors grew more confident in a controlled slowdown, continued disinflation, and the likelihood of global rate cuts beginning mid-year. Central banks struck a more dovish tone without prematurely declaring victory, while economic data showed moderate but persistent resilience. Volatility remained low, and risk appetite held firm across asset classes.

United States

U.S. equity markets posted solid gains in March. The S&P 500 rose 3.1% and the Nasdaq Composite added 4.2%, driven by large-cap tech, strong earnings revisions, and dovish central bank guidance. The Federal Reserve kept rates steady at 5.25%–5.50% and maintained its forecast for three rate cuts in 2024. Chair Jerome Powell noted that inflation had continued to trend lower and that the labour market, while still tight, was showing signs of cooling gradually.

The February CPI print, released mid-March, showed headline inflation at 3.2% and core inflation at 3.4%, broadly in line with expectations. Bond yields drifted lower, with the 10-year Treasury ending the month near 4.17%.

Europe

European equities advanced in March, with the Euro Stoxx 50 gaining 4.5% - its best monthly performance since November 2023. The rally was supported by declining inflation, a steady ECB, and signs of a tentative recovery in consumer sentiment and services activity. Germany's DAX reached a new all-time high, while France's CAC 40 rose strongly on industrial and luxury goods strength.

The European Central Bank left rates unchanged at 4.00%, but ECB President Christine Lagarde acknowledged that rate cuts were “becoming more likely” as disinflation progressed. Headline inflation in the eurozone dropped to 2.5%, while core inflation eased to 3.0%. Markets are now pricing in a first cut by June.

Asia-Pacific

Japan's Nikkei 225 rose 2.8% in March, reaching new historic highs. The Bank of Japan made headlines by ending its negative interest rate policy, raising its short-term rate to 0.1% - its first hike since 2007. Despite the symbolic shift, the BoJ emphasised that monetary policy would remain accommodative, reassuring markets and helping the yen recover slightly after months of weakness.

China's equity markets also rebounded modestly. The Hang Seng Index gained 3.0% and the Shanghai Composite rose 1.9%, supported by stimulus pledges at the National People's Congress, including a 5% GDP growth target and increased fiscal spending. Australia's ASX 200 climbed 2.4%, lifted by strong mining performance and stable RBA policy.

Emerging Markets

Emerging markets ended March higher, with the MSCI Emerging Markets Index up 2.7%. Flows into EM equities and debt remained positive as the Fed's dovish stance and a softer dollar provided tailwinds. Asia ex-China, India, and Latin America outperformed.

India's Nifty 50 rose 1.9%, supported by strong earnings and pre-election optimism. Brazil's Bovespa gained 2.6%, buoyed by a stable inflation outlook and expectations of further rate cuts. Mexico and Indonesia also saw positive returns as local central banks signalled easing bias in the second half of the year.

Commodities

Oil prices climbed steadily through March. Brent crude rose from USD 83 to USD 89/barrel, supported by tight supply forecasts, OPEC+ production discipline, and geopolitical disruptions in the Middle East and Red Sea shipping lanes. Demand optimism also improved with China's modest recovery.

Gold broke through record highs, finishing the month near USD 2,230/oz, driven by falling real yields, central bank purchases, and investor hedging ahead of global monetary easing. Copper rose 3.5%, as supply disruptions and hopes for a pickup in global industrial activity supported prices.

Fixed Income & Currencies

Bond yields declined slightly in March, reflecting confidence in the Fed's guidance and improving inflation data. The U.S. 10-year yield fell by 10 basis points over the month. Eurozone and UK yields moved similarly lower, while Japanese yields remained anchored despite the BoJ's policy adjustment.

The U.S. dollar was flat against a basket of peers. The yen strengthened modestly following the BoJ rate hike. The euro and pound were steady, and the Singapore dollar remained firm. Emerging market currencies posted modest gains against the dollar on improved global liquidity sentiment.

Outlook

March closed a strong first quarter for risk assets, but investors are now watching for signs of policy execution, earnings durability, and macroeconomic divergence. While the Fed and ECB are moving closer to cuts, markets may become more sensitive to growth data, labour market softening, and global political developments.

Brightness Capital & Asset Advisory remains tactically optimistic, favouring large-cap equities, investment-grade credit, and selective EM exposure. We continue to monitor inflation risks, currency trends, and asset class correlations as the next phase of the 2024 cycle begins to unfold.