It’s good to end the month on a Friday. Especially when the news is better than it has been for some time. It was only a few weeks ago that revelations about Silicon Valley Bank followed by the fire sale of Credit Suisse were causing further disruption across global markets. Today things look better. And maybe there is some light at the end of the tunnel finally? #DisruptionBanking analyzed some of the biggest stories in order to help our readers better understand whether markets have recovered yet. Or not.
Companies that have helped lift the gloom here in Europe include Shell and InPost SA. European stocks were performing very well until the uncertainty that affected markets earlier in March. Inflation is cooling so luckily stocks started to recover again. Many of them this week.
China’s Economy is Open for Business
China continues to reopen. This week saw a meeting of some of the biggest tech firms take place at the China Development Forum in Beijing. Where Apple’s Tim Cook was one of the high profile attendees.
Wang Wentao, China’s Minister of Commerce said in his meeting with Cook that the Chinese government is willing to provide a good environment and services to foreign companies including Apple. Apple shares have performed well in March, with the share price breaching $160 for the first time since September 2022.
This week the Chinese government continued to promote the Invest in China Year campaign. Jack Ma was out and about talking to people in Beijing at the Forum too.
Earlier in March China’s inflation rate sunk to 1.0%, partially due to the prolonged lockdowns and the drop in demand by consumers at the end of 2022.
The FAANGs, especially Facebook’s Meta, lead the recovery
With talk of tech layoffs hitting markets globally, it might seem surprising that the biggest tech companies showed dramatic improvements in March. Apple is up 26.44% since the start of the year, 10.41% since the beginning of March.
Alphabet’s stock price has also increased since the beginning of the year, by almost 16%. The price went up over 13% in March.
Incredibly, though, Meta’s stock price has increased over 75% since the start of the year. Almost 21% in March. Showing that some of Zuckerberg’s actions of late have been well received by investors. Maybe slowing down the arrival of the Metaverse has worked to his favour.
Netflix is another stock to have improved this year so far. By 18.5% so far, and 4.55% in March.
Which leaves Amazon. Another winner since the turn of the year, but perhaps not as much as one would have expected. Showing growth of 22.7% since January, the tech giant only grew 9.5% in March. Yes, this is better than Netflix. But Amazon’s business model is also arguably dramatically better than Netflix.
Fears of a bear market continuing into 2023 seem to be subsiding. For now.
Tesla is another stock that affects markets. The car maker dropped by over 7% in March, whilst it is up almost 63% since January.
On the flipside, companies like Chevron, Pfizer, Bank of America, Charles Schwab have all lost substantial amounts from their share prices since January. Other banks and pharmaceutical companies didn’t fare much better. But Charles Schwab has been hit the hardest amongst large cap companies, losing over 36% of its share price so far in 2023. The majority of the losses coming in March.
The Fight against Inflation
It wasn’t long ago that market commentators were worried about inflation spiraling out of control. Some even suggested that a similar aggressive policy to the one adopted by Paul Volcker in 1980 would be needed. Things have changed today. The Fed is expected to be a lot more moderate going forward. This, in turn, will calm other central banks around the world. Indeed, in France inflation eased for the first time in three months. Dropping below 7%.
Japan’s inflation levels also fell in March, dropping to 3.3%, but still remain high. 2% is the figure that the Bank of Japan (BOJ) and other central banks across the world are looking for. Interestingly the International Monetary Fund said that the BOJ should avoid a premature exit from monetary easing:
“Any changes to monetary policy settings will need to be well communicated to facilitate smoother transitions and protect financial stability.”
Other market performances
Bitcoin is up almost 70% since the start of the year. Even with several crypto-friendly banks going under in March, the cryptocurrency has quickly recovered and continues to strengthen above the $22,000 mark.
Things look much brighter than they were. However, if you take out some of the best performances in the S&P500 then actually the bear market may not quite be over. Without stocks like Tesla and Meta performing as they have this year so far, the S&P500 would only be up by 0.5%.
Apparently the smart money seems to agree that stocks are still expensive.
Perhaps things look better. Spring is in the air. But, most importantly, we are not out of the woods yet. A few good results doesn’t mean the markets have rebounded. There may still be uncertainty ahead. A lot of it.
Author: Andy Samu
