Introduction

March 2025 concluded a strong first quarter for global markets, with equities, bonds, and commodities all advancing. Continued disinflation, firm labor markets, and synchronized policy easing expectations kept risk sentiment buoyant. Central banks across developed and emerging markets signaled confidence in economic soft-landing scenarios, while volatility remained low and liquidity improved across asset classes.

United States

U.S. equities closed higher for a third straight month. The S&P 500 rose 3.3% and the Nasdaq Composite added 4.0%, driven by AI-related technology names, cyclical industrials, and financials. Investor confidence was buoyed by further disinflation and resilient consumer data.

The February CPI showed headline inflation at 2.6% and core at 2.8%. The Federal Reserve held rates at 5.25%–5.50% but reiterated that cuts could begin “as soon as May,” contingent on continued inflation moderation. The 10-year Treasury yield dipped to 3.78% before ending the month at 3.85%.

Europe

European markets advanced steadily. The Euro Stoxx 50 rose 2.9%, supported by falling bond yields, improving sentiment in Southern Europe, and stabilizing PMIs. Corporate earnings held up well, and banks outperformed as credit growth remained positive.

The European Central Bank kept rates on hold but gave its strongest indication yet that a June rate cut was "likely." Eurozone inflation fell to 1.8%, and core CPI dipped to 2.1%. German bund yields declined, and the euro appreciated modestly versus the dollar.

Asia-Pacific

Asian equities had a strong month. Japan's Nikkei 225 gained 4.4%, hitting a new all-time high. The Bank of Japan finally exited negative rates, raising its policy rate to 0.1% in a long-anticipated move. Markets took the shift in stride, with the central bank reaffirming a slow and gradual normalization path.

China's Hang Seng Index climbed 3.5% and the Shanghai Composite rose 2.6%, helped by positive industrial production and retail sales data. Stimulus announcements continued, including targeted lending programs and VAT relief for manufacturers. Australia's ASX 200 added 2.3%, lifted by strength in energy and mining sectors.

Emerging Markets

Emerging markets continued their Q1 rally. The MSCI Emerging Markets Index rose 4.6%, with broad-based gains across Asia, Latin America, and EMEA. Local bonds outperformed hard currency debt as rate-cut expectations intensified.

India's Nifty 50 advanced 3.0%, supported by political stability and strong domestic demand. Brazil's Bovespa gained 3.8% amid falling inflation and renewed reform momentum. South Africa, Mexico, and Indonesia also posted gains, while Turkey lagged on currency volatility and rate uncertainty.

Commodities

Oil prices rose for a third month. Brent crude ended at USD 89/barrel, up from USD 87, supported by OPEC+ supply discipline and robust spring demand forecasts. U.S. rig counts remained subdued, keeping the market relatively tight.

Gold surged to USD 2,578/oz, setting a new monthly record, as central banks continued to buy and real yields remained low. Copper climbed 4.1% on growing demand from green energy and infrastructure spending, coupled with Chilean supply disruptions.

Fixed Income & Currencies

Global bonds held their Q1 gains. The U.S. 10-year yield remained below 4%, while German and UK yields also moved lower. Credit spreads were stable across both IG and HY markets, and issuance remained strong.

The U.S. dollar traded mostly flat. The yen appreciated following the BoJ rate hike, while the euro edged higher on ECB policy clarity. The Singapore dollar remained firm on strong external balances. EM currencies were mixed, with strength in Latin America and relative weakness in Eastern Europe.

Outlook

March wrapped up a strong start to 2025. With inflation cooling and global central banks aligned on easing, markets have entered a more supportive environment. Earnings stability and improving liquidity remain tailwinds, but elevated valuations and macro divergences may lead to sector and regional rotation in Q2.

Brightness Capital & Asset Advisory maintains a constructive stance into April, favouring global quality equities, selective EM opportunities, and moderate duration exposure in fixed income. We continue to monitor labor market trends, earnings guidance, and geopolitical developments as Q2 begins.