March general market comments

“Say No Go” – De La Soul, 1989.

March 2025 was a wild ride for financial markets, a bit like De La Soul’s “Say No Go”: trying to reject bad vibes, even when it gets shaky. Caution prevailed at the beginning of the month, but investors were hoping for a smooth jam with deregulation and AI-driven growth to keep the party going; unfortunately, like De La Soul warns about dodging the wrong crowd, trade tensions flared up fast with a 25% tariff hit on Canada and Mexico and a 10% tariff hike on Chinese goods, which triggered retaliation from Canada (25% on US exports) and from China (15% on US agricultural products). Markets went in a “Say No Go” mode, with the S&P500 dipping into correction territory, while the Nasdaq and the dollar cratered.

The Fed maintained its rates steady, with Powell playing cool as he said that the economy was still “plugging in the sunshine”, mentioning solid labor conditions, but inflation refusing to significantly tame led Jerome to rebuff flipping the script.

The S&P500 lost 5.75% in March, the Nasdaq 7.69% and the Stoxx 600 Europe 4.18%. It wasn’t all doom though, as the Japanese Topix resisted somewhat (-0.87%), like China (-0.07%) while the MSCI Emerging Markets rose (+0.38%). In this context, the MSCI World Value outpaced – again – the MSCI World Growth, with a -1.56% return for the former and -7.59% for the latter.

On the fixed income side, Germany’s possibly more relaxed stance on budget deficit, added to looming better prospects for the Old Continent’s economy, pushed yields higher (+33 bps for the German or Italian 10 year yields) on this side of the pond, while they stayed unscathed in the US. After two convincing months, Credit took a hit (-1.3% for the Itraxx Crossover), weakened by a steepening yield curve and increased recession risks in the US. The dollar tumbled 4.21% versus the euro and almost all commodities rose (Oil added 2.47%); Gold is the shining star of the year, hitting record highs above “The Magic Number” $ 3’000 per ounce (+9.3% in March), showing that investors are “Keepin’ the Faith”, even if at these levels “Stakes Is High”. So far it’s “All Good”, but “Watch Out”!

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