The main equity markets made further progress in March. The EuroStoxx 600, the S&P 500 and the Nasdaq gained 4 %, 3.2 % and 1.9 % respectively between 29 February and 28 March.
In March, the equity indices continued their calm but determined march towards the top. Most of the investors we talk to are surprised by this and express their doubts. How can it be that the market is rising as if everything were for the best in the best of worlds, when it is clear that so much is going wrong? Consumption is sluggish, China is not picking up, the electric vehicle market is at half-mast, Europe is mired in sluggish growth, the war in Ukraine continues with no resolution in sight…
And there’s no doubt about that. However, we need to bear in mind that while so many things are going wrong, some parts of the economy are not doing so badly. American growth remains impressive. In Europe, the energy crisis now seems to be well behind us, and sectors such as banking and industry are doing better than well.
Furthermore, the market is not so much a machine designed to make a diagnosis at a given moment as to anticipate future changes. The situation may be catastrophic, but the fact remains that if it stops deteriorating, that’s where the market’s attention will be focused, and it will move forward again.
So while the prospect of a Trump-Biden duel does not seem to be arousing the enthusiasm of the masses, the global economy seems on the verge of picking up speed on the back of the rate cuts that are now imminent. The consumer sector remains bogged down by consumers’ loss of real purchasing power after an unprecedented post-COVID inflation spike, but the momentum driven by the AI revolution is as strong as ever. In our portfolios, Micron was hailed by the market after raising its expectations. Its new high-bandwidth random access memory (HBM) product is now a bottleneck for the supercomputers used to train and run models such as ChatGPT and Mistral, and demand has not been slow in coming.
We therefore remain confident at this stage and see no reason for undue concern in the short term. Nevertheless, as always, we remain vigilant and ready to change our view should any worrying signs emerge.
The Clartan funds all rose in March: Valeurs by 5.6 %, Europe by 4.2 %, Ethos by 3.3 %, Evolution by 3.0 % and Patrimoine by 0.7 %.