Domestic equity markets managed to increase, despite iron-ore prices falling off and ending a little over $100 USD/t. March ended with the ASX almost breaking 7,900 points off the back of all but 2 of our top 10 companies (approximately 44% of listed companies) being positive for the month. With interest rates continuing to benefit the banks and the big miners having the ability to continue to create significant profit while iron-ore remains over $100 USD/t, there doesn’t seem to be anything drastically stopping the performance of domestic equities.
The Australian 10-year government bond yield decreased to 3.99%, and is now further below the RBA cash rate. With the housing market continuing to be strong, expectations of rate cuts have been pushed further back, meaning long-term bond yields will remain below the cash rate for the foreseeable future.
Global equities had another great month, with the US and Europe also continuing to push all-time highs further up as their economies continue to remain in good shape. Despite valuations, investors are looking to remain in developed Western countries. However unlike the recent year, this was not due to the ‘magnificent 7’ as tech struggled through March. The Hang Seng remained relatively flat after an excellent month prior, and we believe valuations continue to look appealing.
The US economy continues to remain in good shape, with solid growth and a strong labour market. As a result the Fed continues to reaffirm that they have the ability to be patient before interest rate cuts begin. Although the USD remained flat over the month, the US ability to potentially push rate cuts back will likely strengthen the USD in the short term.
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