Global Asset Allocation Team Market Update – April 2024

Global stock markets notched their fifth straight monthly gain in March, with the MSCI All Country World gaining nearly 3.0%. The S&P 500 rose 3.1%, while the S&P/TSX added 3.8% – with strength in the heavyweight energy and materials sectors driving Canadian equity outperformance last month. Both the S&P 500 and the S&P/TSX ended the first quarter at record highs. Elsewhere, the MSCI EAFE advanced 2.8%, while the MSCI gauge of emerging market equities gained 2.2%, with underperformance driven by Chinese stocks after an underwhelming stimulus announcement at the National People’s Congress. 

Fixed income markets also generated positive results in March as investors digested comments from Federal Reserve officials who reiterated that the central bank is in no rush to cut borrowing costs. Comments from Governor Waller weighed on the front-end of the treasury curve late in the month after saying the recent data warrants fewer rate cuts and a later start to monetary policy easing. Chair Powell echoed these remarks late in the month, repeating that the central bank isn’t in any rush to cut interest rates as policymakers await more evidence that inflation is contained. Investors have pared back earlier expectations for as much as six cuts this year to fewer than three currently. For the month, the Barclays US Aggregate Bond Index rose 0.9%, while the FTSE Canada Bond Universe gained 0.5%. 

The US dollar (DXY) extended its winning streak in March following comments from Federal Reserve officials who repeated that its premature to cut interest rates. Solid economic data in the United States also buttressed the greenback, with gross domestic product and consumer spending both posting strong advances at the end of 2023 – while consumer sentiment rose markedly toward the end of March. The greenback was stronger versus the yen (-0.9%) and euro (-0.1%), while remaining virtually unchanged versus the pound. The Canadian dollar (+0.3%) managed to buck the global trend and strengthened on the back of the latest rally in crude oil prices. 

On that note, oil clinched its third straight monthly gain and sealed an impressive 16% quarterly advance on the back of bullish tailwinds stemming from lower OPEC+ output and escalating Middle East tensions that have tightened physical market conditions. Finally, gold extended its recent gains to hit a fresh all-time high – fueled by bets for an eventual pivot to rate cuts later in 2024 and amid deepening geopolitical tensions that have boosted demand for the safe haven metal.

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