Global stock markets suffered another dismal month in March, as investors worried about the impact of a slowing economy on corporate profits. Only one market - China - managed a gain of more than 2% in dollar terms, according to figures compiled by FTSE, the index group.
China was the star performer of the month as the authorities opened up the B share market which had previously been reserved for foreigners. It’s market gained more than 20% on the month, but that was almost the only bright spot for investors. Finland, Argentina and Taiwan were the only other markets to achieve any gain at all in global terms.
Even a cut in US interest rates did nothing for sentiment, as the Federal Reserve reduced rates by half a percentage point, rather than the three-quarters on which many in the markets had pinned their hopes. The sell-off sent the Dow Jones Industrial Average below 10,000 and the Nasdaq Composite below 2,000.
Losing markets were hit by a variety of factors including the continued drip feed of profit warnings from the corporate sector. Sweden, the month’s worst performing market, was dragged down by more bad news from Ericsson, the technology and mobile telecoms group.
In Singapore, the bearish factor was the takeover of Optus by Singapore Telecom, which dragged down the latter’s shares. Meanwhile, political uncertainty continued to damage the Indonesian market, while Turkey suffered from the after-effects of its recent devaluations.
Within Europe, signs of an economic slowdown ensured that the best performing sectors included the traditional defensive industries of real estate, gas and water. But the European Central Bank decided against cutting interest rates when it met towards the end of the month.
For once, it was not a simple case of TMTs (technology, media and telecom) stocks versus the rest. Although many tech stocks were hit, the two best performers of the month were the chip makers Infineon Technology and ST Microelectronics on hopes that the worst might be over for the highly cyclical sector.
Dresdner Bank was among the other top performers of the month as Allianz, the German insurance giant, confirmed it was in bid talks with the group. Software and telecoms stocks were among the biggest losers on earnings and valuation concerns. Cable & Wireless, the telecoms group, saw its stock savaged by a profits warning; the likes of Colt Telecom and Energis were dragged down in its wake.
By Scott Anderson
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