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Market Update

March 2015 Update

Euro bond markets boosted by quantitative easing

The FTSE 100 index hit a new high in March, but quickly gave up these gains to end the month in negative territory. UK indices have underperformed many of their global counterparts over the last year, largely because they contain a high proportion of poorly performing mining and energy companies. This theme hit share prices again in March. Shares in Anglo American and Rio Tinto were big fallers as Chinese steel production data pushed iron ore prices to record lows.

The performance of the US equity market was mixed, as share prices moved in response to comments from the Federal Reserve. The US central bank dropped reference to being “patient” from a statement about the timing of any increase to US rates. Nevertheless, investors were reassured by comments from the head of the central bank, Janet Yellen. She said that the Fed would not raise rates until there is “further improvement in the labour market” and evidence that US inflation is moving back towards its 2% target.

European equity markets produced some of the best returns during March. The euro’s weakness boosted hopes of higher earnings for companies, particularly exporters. The currency fell to a 12-year low against the US dollar at one point, after the European Central Bank started its massive asset-buying programme (quantitative easing).

The launch of quantitative easing in the Eurozone also boosted bond markets in the region. US and UK government bond markets also finished the month ahead, though gains were tempered by concerns about inflation and rising interest rates in the early part of the month.

Signs of a slowdown in growth within the UK commercial property market continued into March. Monthly total returns were slightly weaker, suggesting that the overpriced market may finally be taking its toll on investors. There was also evidence that activity is starting to spread outside the overheated central London market.

Most of the major commodity markets lost ground. Copper was the only exception, boosted by hopes of a revival in Chinese demand. Having fallen to a five-year low in January, there has been a small uplift in sentiment, based on expectations that the Chinese government will introduce measures to stimulate flagging economic growth.

Should I make any changes to my investments?

Everyone’s circumstances are different and we aren’t able to give you advice on what is appropriate for you. As always, if you are considering your own position, you should remember why you invested in the first place and consider the lifespan of your investments. Most importantly, you should seek financial advice before making any changes to your investments.

One way in which you can help reduce the impact of any market volatility is to spread your investments across different asset classes and regions. For more information about investing across different asset classes, take a look at our An introduction to diversification in multi-asset funds guide.

Remember that before making any changes to your investments, you should seek financial advice. If you don’t have a financial adviser, you can find one local to you by visiting find a financial adviser, which is responsible for promoting financial advice in the UK.

All figures quoted are in sterling terms to 31 December 2014 unless otherwise stated.

The information contained in this article has been derived from sources which we consider to be reasonable and appropriate. It may also include our views and expectations, which cannot be taken as fact.

Investment markets and conditions can change rapidly and, as such, the views expressed in this Update should not be taken as statements of fact nor be relied on when making investment decisions. Forecasts are opinions only, can not be guaranteed and should not be relied on when making investment decisions.

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