April 2015 - Market Review

While discussions over Greece’s financial future rumbled on during March, investors’ attention was diverted by continuing speculation over the outlook for US monetary policy. The US Federal Reserve’s stance on interest rates underwent a shift during the month as policymakers removed the term “patience” from their statement. Nevertheless, the Fed reassured investors the US labour market has to improve before interest rates can increase. The Dow Jones Industrial Average index fell 2% during March, edging 0.3% lower over the first quarter of 2015 as a whole.

In the UK, politics moved further towards centre stage and the government unveiled its final Budget before May’s General Election. The annualised rate of inflation fell to 0% in February, dampened by falling prices for fuel and food, and UK interest rates notched up their sixth anniversary at 0.5% during March. The UK economy expanded more strongly than originally calculated during the final quarter of 2014, growing at a quarterly rate of 0.6%. The FTSE 100 index hit a new all-time high during the month, reaching 7,037.67 points, but fell 2.5% over March as a whole.

Across the Channel, the European Central Bank (ECB) increased its forecast for economic growth in the euro area in 2015 to 1.5%, reflecting a slightly more sanguine mood among policymakers. Although the eurozone remained in deflationary territory during March, the rate of deflation moderated – the region’s consumer prices index fell at an annualised rate of 0.1% during the month, compared with February’s drop of 0.3%. Meanwhile, the eurozone’s rate of unemployment eased from 11.4% in January to 11.3% in February.

The ECB started its programme of quantitative easing measures during the month and the news provided a boost for share prices in the region. Germany’s Dax index rose 5% in March and surged 22% over the first quarter; meanwhile, France’s CAC 40 index rose 1.7% over the month and notched up quarterly growth of 17.8%. As March ended, Greece’s predicament remained unresolved.

Japan’s economic growth during the final quarter of 2014 was weaker than previously calculated. The economy expanded at an annualised rate of only 1.5% during the period, compared with an earlier estimate of 2.2%. Nevertheless, during the month, the Nikkei 225 index reached its highest level since April 2000, breaching 19,000 points for the first time in 15 years. Over March as a whole, the benchmark index rose 2.2%.

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Tags: Dow Jones Industrial Average indexECBFrance CAC 40 indexFTSE 100 indexGerman Dax indexMay's general electionUS Federal ReserveUS labour marketUS Monetary policy

Categories: Market ReviewSavings

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