Sharemarkets will start the June quarter and the month of April on tenterhooks today after a the rebound from the sell off in January and early February ran out of puff in the closing days of the first quarter.
The weaker US dollar will be a factor from now on for many companies – gold, oil, copper and other commodities were helped higher by the steepest quarterly fall for the greenback in years.
But US bond yields fell sharply, with the key 10 year bond shedding 41 points to end the quarter on 1.784%.It was the biggest quarterly fall in four years.
The usual start of month surveys of global manufacturing, kicked off by the two from China, and the US March jobs and unemployment data tonight from the US will again test the resilience of the recovery in investor confidence, especially if the US jobs report shows more than the expected 200,000 jobs created.
Investors though now believe the US Federal Reserve will ignore monthly jobs data for a while before looking at a rate increase from September onwards, but for many in the markets, the start of the March quarter earnings reporting season is the big imponderable.
Weak results from banks, retailers, oil and gas companies and perhaps tech leaders like Apple have conditioned investors to think the worse (although many companies and analysts seem to be setting earnings targets low so they can be topped).
But the emergence of new factors for investors to confront means the rebound in the final six weeks of the last quarter are well and truly behind us.
The ASX will start the new quarter in the red with losses of 10 to 20 points for the ASX 200 pencilled in by futures trading.
A second surge by the dollar past 77 US cents overnight will focus attention on export stocks such as miners and the like (which rose sharply on Thursday for no real reason except perhaps end of quarter window dressing).
The local market rose 1.4% yesterday (that window dressing) to 5082.8 for the ASX 200 and and 5151.4 for the All Ords.
That capped a good month for investors, withe the ASX 200 up 4.2% in the month, but still down 4% for the quarter. Thursday’s confidence looks like being tested for some weeks to come.
On Wall Street, the S&P 500 rose sharply in March, after three straight months of falls.
The key index jumped 6.7% over the month, the biggest since last October. Over the quarter, however, the index was us up a modest 0.8%, but bounced back from the sharp sell off that dominated the first six weeks of the year Since reaching a 2016 low on February 11, the Dow and S&P 500 have gained nearly 13%, while the best performer over that stretch, the Nasdaq, had jumped 14%.
The Dow closed down 21 points, or 0.1% at 17,690 overnight Thursday. That left a gain of 7% over the month and the Dow is up 2% since the start of the year.
The Nasdaq Composite finished flat on Thursday at 4,878 and notched up a 7% return over the month, but was still down 2.6% for the quarter.
In Europe, markets had a bad quarter with the Stoxx 600 shedding a massive 7.7% in value. That was its worst since a 8.8% drop in the third quarter of of last year. For the month, it did better, rising 1.1% for its first monthly advance since November last year.
The Italian market plunged 15.4% in the quarter and dragged much of the rest of the area lower with its banks the black hole.
For March, London’s FTSE 100 rose 1.3%, but dropped 1.1% for the quarter.
In Asia, Shanghai rose 0.1% Thursday but lost 15% for the quarter.
Likewise the Nikkei 225 in Tokyo eased 0.7% yesterday and took its losses for the year to 12% as the stronger yen battered export stocks lower. That will again be the big factor for the Japanese market this quarter. Watch for the quarterly Tankan report from the Bank of Japan out later today.
