Equity markets were stronger in March. In the US, the S&P 500 rose +3.1%, the Nasdaq was up +1.8%, whilst in the UK, the FTSE 100 rose +4.2%. In Australia, the All Ordinaries Accumulation Index rose +3.1%. Gold and real estate were the top performing sectors, whilst communications was the worst performer. In terms of sector performance, there was no clear reason for the ~9% rise in the gold price in the month, whilst real estate stocks were boosted by falling bond rates.

Broadly speaking, inflation continues to gradually track down towards the top end of central bank inflation targets, providing confidence we have seen the end of interest rate hikes. This has been the main driver of strength in equity markets in the last five months in our view. In bond markets, the US 10-year bond rate fell -7 basis points (bp) to close at4.20%, whilst its Australian counterpart fell +17 bp to finish at 3.97%. The Australian dollar was again flat for the month, ending at US$0.65.