The month of March brought with it a mix of uncertainty, volatility and mixed signals from major financial markets. The common thread? Pressure, geopolitics, inflation, divergent economic policies, and investor reactions contributed to a challenging environment where caution and selectivity became watchwords.
Global scenario: instability and divergence
In the United States, the new wave of tariffs imposed by the Trump Administration has triggered a correction in stock markets and fueled fears about inflation, now at 5%. The labor market shows signs of slowing, while the administration has initiated structural reform with the creation of the D.O.G.E., a task force to digitize public administration.
In Europe, institutions responded to the suspension of U.S. aid to Ukraine with a EUR 800 billion plan for defense, accompanied by major fiscal maneuvers in Germany. These measures pushed up bond yields, with the 10-year Bund at 2.69% and the BTP at 3.8%. However, inflation in the eurozone shows signs of cooling, with CPI at 2.2%.
In the Asian region, the economies of Japan and Australia remain resilient, but trade tensions with the U.S. limit future visibility. Bucking the trend, China closes March in positive territory, nominating itself as a possible alternative for investors.
Stock markets: divergence and sector rotation
Stock market performance reflected growing uncertainty. U.S. technology led the decline-the “Magnificent Seven” ETF (a fund that replicates the performance of the world’s seven largest technology companies) has lost more than 15% since the beginning of the year-while Value stocks and utilities held up better. In Europe, losses have been small (between -1% and -2%), while China has risen modestly.
Bond markets: rising yields and rising caution
European bond markets were affected by the new German fiscal policy: the 10-year Bund closed at 2.69%, the BTP at 3.81%. In the U.S., signs of economic slowdown supported Treasuries, with the 10-year holding steady at 4.22%. The ECB, with inflation falling slightly, appears more cautious about upcoming rate cuts. Preference for short maturity Investment Grade bonds is strengthened, while High Yield and long maturities are avoided.
Commodities and currencies: gold soaring, oil subdued
Gold rose above USD 3,000 an ounce, confirming itself as a safe haven asset amid high volatility. Oil fell to USD 60 a barrel, reflecting fears about growth and global demand. Cryptocurrencies, while more politically visible, have yet to gain the confidence needed in more conservative portfolios.
Conclusion: pressure yes, but also opportunities
The macroeconomic picture remains uncertain and changing. Increased volatility and geopolitical tensions justify a very selective approach. We maintain a defensive strategy, with low equity exposure, preference for utilities, and focus on good quality bonds. Pressure can also be a driver of change. And in a changing world, knowing how to adapt to the portfolio is already half the challenge.