March was a month with overall solid gains in Europe and the United States. Yields on 10-year Treasure notes stabilized after strong gains since November last year, somewhat easing concerns on potential interest rate hikes. Rising bond yields have kept markets on edge so far this year on concerns that an economic recovery from COVID-19, combined with fiscal stimulus, could cause a spike in inflation from catch-up consumer demand when lockdowns end.

The technology sector once again underperformed other sectors as a result of a selloff with investors taking refuge in sectors that are more likely to benefit from an economic recovery.

The Eurostoxx 50 gained 7,78 %, the German DAX 8,86 % and the French CAC40 6,38 %. The Slovenian SBITOP gained less but still a decent 3,06 %. The UK FTSE index increased by 3,55 %, but the Pound Sterling also lost 1,61 % against the Euro. 

In the USA the Dow Jones gained 6,62 % and the S&P500 4,24 %. The tech-havy Nasdaq on the other hand only gained 0,41 %. The dollar however also gained 2,87 % to 0,1728 against the Euro. President Biden's 1,9 trillion dollars stimulus package, known as the »American Rescue Plan«,  was approved one-sidedly. In addition Biden unveiled a $2 trillion economic recovery plan in late March. The proposal, called the American Jobs Plan, would in part be financed by raising the corporate tax rate from 21 % to 28 % and aims to overhaul America's infrastructure. In addition to upgrading classic infrastructure such as roads, bridges and waterways, it designates a considerable portion to research and development of green energy, among many other items. It is the first of the two economic recovery plans the administration plans to roll out with the latter, the American Families Plan, expected to be laid out in detail in April.

Meanwhile the Asian markets had mixed results with the Japanese Nikkei adding 0,73 % but Hong Kong Hang Seng index losing 2,08 %. Among the main markets, China (and by extension Hong Kong) had the worst performance on concerns of the continuing crackdown by the Chinese government to prevent monopolistic practices by large technology companies, such as Alibaba and Tencent Holdings. Meanwhile in Japan, manufacturing showed the fastest growth in two years, since December 2018, as strong orders led to the first output rise since the start of the coronavirus pandemic. 

On the commodities market, oil surrendered some of its February gain and lost 3,8% to 59,16 dollars per barrel. Also precious metals booked losses as inflation concerns somewhat eased by month-end with treasury yields stabilizing.

Rudy Marchant
Fund manager Primorski skladi d.o.o. Koper

Monthly reports - March 2021