Given the large amounts of political anguish and indecision in the months leading up to the Brexit deadline, it perhaps comes as no surprise that the UK has not left the European Union as of 29th March. At least, markets weren’t too surprised, as volatility has remained low. The FTSE 100 index has gained +9.49% since the start of the year. The pound has fluctuated, but is ahead of most major currencies so far this year, having gained +2.20% against the US dollar and +4.48% against the euro.
In the US, the trade deficit has reached a new ten-year high. The US has held the world’s largest trade deficit since 1975, but in 2018 the difference between imports and exports grew to $621 billion, the highest it has been since 2008. More than 65% of the deficit in goods is with China, where the US imported $540 billion in goods whilst only exporting $120 billion. The widest deficit in ten years is not good news for Donald Trump, as reducing the trade gap was one of his key policies.
Asda has overtaken Sainsbury's to become the UK's number two supermarket group by market share. Sales at Sainsbury's have fallen by 1.8% in the first twelve weeks of the year, bringing its market share down to 15.3%, while Asda's sales have increased 0.1% and it now has a 15.4% market share. Tesco remains the clear market leader with a 27.4% share. Sainsbury's potential £7.3 billion takeover of Asda is being considered by the Competition and Markets Authority, with a final report due by April 30th.
Here is the full round-up of March market performance. In the UK, the FTSE 100 index gained 3.29%, while medium and smaller companies, measured by the FTSE 250 ex IT index and the FTSE Small Cap ex IT index, returned -0.46% and +0.68% respectively. In the US, the S&P 500 index climbed +1.94%, while in Europe the Eurostoxx 50 index gathered +1.86%. Japanese stocks measured by the Topix index were flat on +0.09%.
Emerging market returns were positive. The MSCI Emerging Markets index gained +1.39%. Chinese equities measured by the MSCI China index lifted +2.45% and Latin American equities, measured by the MSCI Latin America index, put on +0.35%. Indian stocks measured by the IISL Nifty 50 PR index surged +7.70%.
In the fixed income market, UK government bonds, measured by the FTSE Gilts All Stocks index, rose +3.20% and long dated (over 15 years to maturity) gilts soared +5.52%. European corporate bonds, measured by the Markit iBoxx Euro Corporates index, increased +1.38% while sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, returned +2.54%. In the high yield market, the Bank of America Merrill Lynch Euro High Yield index and the Bank of America Merrill Lynch Sterling High Yield index grew +1.10% and +1.19% respectively.
Commodities had a mixed month. The S&P GSCI index, which consists of a basket of commodities including oil, metals and agricultural items, climbed +1.61%. Oil continued its strong start to the year as the price of a crude oil contract gained a further +4.39%. However the precious metals saw negative returns as the S&P GSCI Gold and Silver indices dipped -1.64% and -3.16% respectively. In the agricultural markets, corn and wheat declined -3.84% and -0.38% respectively.
James Timpson CFA, BSc (Hons), IMC
(All the above returns are reflected on a local currency basis i.e. they do not factor in any relevant currency movements. Unless accompanied by PR (Price Return), they do include income).
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