GLOBAL
International markets staged a smart rally in March. The rebound was pushed by stocks in emerging markets, tailed by the US European and Japanese markets. The outlook for most markets remains bullish, while the US market may witness short term turmoil.
Major US equity indices point to a lower future, as oil prices soften, yen gathers strength and the dollar yields ground. Markets in Japan posted gains after seven straight sessions of losses.
US
The rebound in stock values in March has many analysts predicting that good times are back again. This is probably due to bad fright they received in January and February when markets tumbled, leading many to believe, ironically in the current context, that a slump was imminent.
However this is to miss the woods for the trees. The main reason for the March rally was separate statements by Fed Chair Yellen and ECB President Draghi that they would continue easy money and low/negative interest rate regimes till such times as markets were comfortable with rate increases. Little wonder then that markets rose almost overnight from two month lows. Of the thirty components of the Dow, twenty four closed higher.
Yet the market has blithely ignored the poor earnings record in the last quarter of the previous year, taking heart instead in the 1.4% growth in US GDP. However the month of April may be a challenge for the markets. Quarterly earnings will be out in April and if these are down, it will be very difficult to continue to pretend that all is well. Another worrying factor is the interest rate spike witnessed in the junk bonds market. It is noteworthy that there were similar spikes both in 2008 and 2000, before markets tumbled.
EUROPE
Markets in Europe rebounded in March, buoyed by the European Central Bank's accommodative stance in its policy meeting in March. There was good news too from the manufacturing sector in the eurozone, while Germany recorded its lowest employment in a quarter of a century. Firmer oil prices too led to improved sentiment.
ASIA
CHINA
Chinese stocks held their own in March, buoyed by global optimism, strengthening oil prices and some good economic data coming from China itself.
"Despite some spots of stabilization in China, we've seen some rather downbeat forecasts from the WTO," said Vishnu Varathan, a Singapore-based economist at Mizuho Bank Ltd. "Oil is very weak. All these are going to factor as negatives for emerging markets." (Bloomberg April 8, 2016)
INDIA
Indian markets witnessed strong growth in March sustained by purchases by FIIs who pumped in Rs.21000 crores in March. Analysts said that this was due to the anticipation that the RBI would bring its policy rates down further at its next meeting in April. Their optimism was bolstered by the 5.18% inflation rate recorded in February. This is very near the RBI's target of 5% inflation rate.
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