Global equity markets posted strong returns in March, their fifth-consecutive month of gains – the MSCI All-Country World Equity index added almost 3% (in USD) to its value, surpassing its previous all-time-high from January 2022. Investors chose to ignore signs of escalating inflation, soothed by central banks’ dovish tone. Both the European Central Bank (ECB) and the Federal Reserve (Fed) announced a more data-driven approach to cutting interest rates. US equities were buoyed by expectations of ongoing growth in corporate profits and solid gains in productivity. The flagship S&P500 index rose 10,2%, and chalked up its best first-quarter result for the last 5 years. Among developed markets, European shares registered the biggest returns in March as some local markets (Germany, Spain, Italy) outperformed regional averages. The UK stocks, currently selling at a valuation discount of nearly 50% to the US ones, rallied strongly as investors were attracted to the high dividend yields. Asian markets continued to lag as China posted negative return for the quarter due to persisting trade wars and weak domestic consumption. The March rally was broad based with every sector posting a positive return for the month, led by Energy and Materials stocks. Consumer discretionary and consumer staples sectors lagged. Commodity prices, most notably gold and oil, rose solidly in March on the back of geopolitical tensions in the Middle East. Global interest rates remained largely unchanged for the month, with the exception of the Bank of Japan, which increased rates (to positive) for the first time in 17 years. Bonds saw modest overall returns over the month, and negative returns over the quarter. The yield of the Bloomberg Global Aggregate Index increased over the quarter (meaning that its price fell), which led to negative returns of -2.1%. The investors’ heightened appetite for risk meant that high-yield issues outperformed during the month.
          March marked the fifth positive month in a row for the major U.S. stock indexes – during the first quarter of 2024 the broad index S&P500 rose more than 10%, the tech-heavy NASDAQ added 9.1%, and the industrial Dow Jones increased by 5.6%. Stocks have been on a bull run: over the last five months, the S&P500 has risen 25.3%. The index had scored 22 all-time highs in 2024 and has gone more than a year without experiencing a one-day decline larger than 2%. A positive development was that US market advances in March began to expand beyond the “Magnificent Seven” stocks. Still, NVIDIA’s 82% return in the first three months accounted for over 24% of the S&P’500’s first-quarter return. Equity gains were driven by some good corporate earnings, including from some of “M7”, buoyed by the ongoing enthusiasm around Artificial Intelligence. The Fed kept interest rates unchanged at 5.5% on its March meeting, commenting that its future decisions will be “careful” and “data-driven” – and forecasted three rate cuts by year-end. However, the pace of cuts is likely to be slower than investors expect, because inflation ticked up for February (to 2,5% year-over-year) and the economy kept demonstrating remarkable resilience. Annualised GDP growth for Q4 was revised up to 3.4%; nonfarm payroll numbers came out robust; and manufacturing PMI, a measure of economic activity, rose to 50.3 in March, signaling expansion (after 16 straight months of contraction). Investors’ sentiment was characterized by a well-pronounced appetite for risk, and the yield on the benchmark 10-year US Treasury rose to 4.32%, its highest levels this year (bond yields and prices move in opposite directions).
           Shares in Europe also posted strong gains in March. The pan-European STOXX600 index rose 3.65%, ascending to record highs, as central banks indicated that interest rates could be cut soon. Many national stock markets saw hefty returns – shares in Italy surged more than 6,5% for the month. Favorable data pointed to improving business activity in the Eurozone. The Purchasing Managers’ Index (PMI) rose to 49.9 in March, signaling stabilization (a PMI reading below 50 indicates contraction). The brightening of the economic outlook boosted economically sensitive stocks – among the top performing sectors were Industrials, Financials (banks were supported by improving shareholder returns) and Information technology (driven by continuing demand for AI related technologies). Lagging sectors were utilities, consumer staples and real estate. Even cooler Eurozone inflation (annual CPI was 2,4% in March vs 2,6% in February) couldn’t help for the ECB to renege on expectations of immediate interest rate cuts. Its President, Christine Lagarde told the European Parliament that the central bank “does not want to run the risk of reversing any cuts”, Meanwhile, the Swiss National Bank surprisingly reduced interest rates by 25 basis points to 1,5% – its first rate cut in nine years – in an attempt to fight appreciation of the Swiss franc. A number of other central banks chose to keep rates unchanged (ECB, Fed, Bank of England, Bank of Norway). Flagship 10-year government bond yields increased across the board, with European sovereign bonds outperforming US Treasuries for the month.
          The uplift on the international equity markets in March spilled over to the domestic one. Of the BSE indices, only the one for small companies, beamX, declined for the month. The representative SOFIX rose by 2.4% and the broad BGBX40 - by 1.6%. March also saw the start of trading in shares of insurance innovator Boleron AD, which raised more than BGN 3m in the first IPO of the year on the beam market. For the month, among Bulgarian companies, the best performer was the technological leader Shelly Group AD, whose price rose more than 14%, and the worst – for the second month in a row – was the commercial bank First Investment Bank AD, whose stock fell 13%.