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If February marked the return of market volatility, March cemented it. Investors were confronted with a string of political and corporate developments over the month that hurt confidence in the economic expansion. Top among these were fears of a disruption in global trade, after US President Trump imposed new import tariffs and tweeted that ‘trade wars are good.’
Sectors most exposed to economic swings, including banks and chemicals, led the month’s retreat. The booming technology sector cracked following reports of data misuse connected to Facebook, a poster child of the market’s rally in recent years. Exactly how the scandal’s ramifications will affect earnings in social-media stocks is unknown, but investors were quick to take profits.
The STOXX® Global 1800 Index fell 3% in euros in the month, taking the retreat since Feb. 1 to 5%. It fell 2.2% in dollars, recording its first quarterly decline in two years.
Benchmarks for all major regions also slid in March, with Asia and North America performing worse than Europe.
Just as the previous month, March was also defined by wide market swings. Between the two months, the STOXX Global 1800 index closed 1% or more in either direction in 14 instances. By comparison, there were only three occasions in all of 2017.
Most iSTOXX® Europe Factor Market Neutral Indices, which seek exposure to pure risk sources and are ‘short’ the broader market, performed positively in March. Minimum variance strategies performed as expected amid the volatility, by beating their benchmarks.
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