Quarter one in review

Global equities had another strong quarter, with several markets reaching all-time highs. That was driven by growing hopes for a soft economic landing, or even a ‘no landing’, along with ongoing optimism around AI. The S&P 500 posted consecutive double-digit gains for the first time in over a decade, while in Japan, the Nikkei saw its strongest performance since the global financial crisis, propelling it above its previous record high from 1989.

Economic data was broadly positive, which saw expectations of a recession in the US fall. However, inflation was slightly higher than expected in both January and February, which prompted the Federal Reserve to caution against cutting rates. As it stands, the market is currently pricing in three 25 basis point cuts in 2024, down from six at the turn of the year.

At the sector level, IT and communication services led the way, with energy and financials not far behind. Sectors hampered by the prospects of rates being higher for longer – namely real estate and utilities – were notable laggards.

Source: Bloomberg, for the quarter ending 31 March 2024.