March 2016

• Global markets delivered a strong recovery in March 2016 as central bank stimulus, stabilising oil prices and improved risk sentiment supported equities worldwide.
• The European Central Bank expanded its monetary easing measures, although the scale disappointed markets, leading to short-term volatility.
• U.S. equities rebounded sharply as fears of recession eased and economic data remained broadly supportive.
• Oil prices rallied significantly from early-year lows, helping to restore confidence across energy and credit markets.
• Emerging markets outperformed developed markets as investors returned to higher-risk assets.
• Safe-haven demand eased, with government bond yields rising modestly from February lows.

Asia (ex. Japan)

Asian markets outside Japan performed strongly in March as global risk appetite improved and Chinese policy support continued to underpin sentiment. China remained a key driver of regional performance, with authorities maintaining accommodative measures and reinforcing fiscal support to stabilise growth expectations.

Elsewhere in the region, export-oriented economies such as South Korea and Taiwan benefited from recovering global demand and stabilising technology sector sentiment. India remained a relative outperformer, supported by steady domestic consumption and continued expectations of structural reform and monetary accommodation.

Europe

European equities experienced heightened volatility in March as the European Central Bank announced further easing measures, including deeper negative interest rates and expanded asset purchases. While initially well received, markets were disappointed by the limited scale of expansion, triggering a sharp reversal before sentiment stabilised.

Despite volatility, economic data showed gradual improvement across parts of the eurozone, particularly in credit conditions and consumer confidence. The weaker euro and ongoing monetary support continued to provide a constructive backdrop for exporters and equity markets overall.

United States

U.S. equities posted strong gains in March as fears of a global recession eased and financial conditions stabilised. Oil prices rebounded significantly, providing relief to energy markets and improving sentiment across credit-sensitive sectors.

Economic indicators remained mixed but generally positive, with steady job creation and resilient consumer spending. The Federal Reserve adopted a more cautious stance, signalling that the pace of future rate increases would likely be slower than previously expected given global uncertainties.

United Kingdom

UK equities advanced in March as improving global sentiment and stabilising commodity prices supported mining and energy stocks. Domestic economic conditions remained steady, with low inflation continuing to underpin household purchasing power.

The Bank of England maintained its accommodative stance, citing subdued inflation and external risks. Sterling remained under pressure against the U.S. dollar, while gilt yields rose modestly in line with broader global bond market movements.

Japan

Japanese equities rose in March as risk sentiment improved globally and the yen stabilised after earlier volatility. The Bank of Japan's negative interest rate policy remained in focus, with investors anticipating additional stimulus if deflationary pressures persisted.

Corporate earnings expectations improved slightly due to stabilising global demand and currency conditions, although domestic inflation remained weak. Investor sentiment was supported by ongoing structural reforms and continued institutional equity allocations.

Emerging Markets

Emerging markets were among the strongest performers in March as stabilising oil prices, a weaker U.S. dollar and improving global growth expectations encouraged capital inflows. Commodity exporters benefited most from the rebound in energy and metals prices.

China remained central to market sentiment, with continued policy support helping to reassure investors about growth stability. India and parts of Southeast Asia also performed well, supported by domestic demand resilience and improving macroeconomic stability.

Commodities

Commodity markets staged a strong rebound in March, led by crude oil which rallied sharply from January and February lows. The recovery was driven by expectations of production freezes among major producers and signs that the worst of the oversupply shock may have passed.

Industrial metals also strengthened as demand expectations improved alongside better Chinese sentiment. Gold prices softened slightly as risk appetite increased and investors rotated out of safe-haven assets into higher-risk exposures.