Equity markets in developed countries were profitable overall in March, with growth of 6% in EUR.
Every passing month looks much like the last: March proved difficult for the "winning" indices of the pandemic, with technology losing ground and giving way to a return to cyclicality and defensive sectors. This reflects a catch-up effect and a degree of optimism linked to the spread of the economic recovery to all sectors.
Geographically, the upturn was apparent everywhere: European and US indices rose in tandem during a month when bond market volatility eased somewhat, with the increase in sovereign yields slowing down.
We will of course continue to pay close attention to the pandemic, vaccination campaigns and the economic recovery as they unfold in order to adjust our positioning on the financial markets.
Generally speaking, new infections remain high in developed countries. There is particular concern in Europe, though, regarding the increase in the figures for the past month. In the United States, the daily number of new cases seems to be stabilising at around 60.000, while in Europe, figures are rising. Countries such as France and Germany, which have four to five times fewer inhabitants than the United States, are recording 40.000 and 20.000 new cases respectively every day.
In addition, vaccination campaigns are ongoing and are still being rolled out unevenly across developed countries. In the US, in addition to the fact that the number of positive cases is now relatively stable, the vaccination campaign has been successful so far: 143 million doses have been administered, immunising almost 25% of the population. Furthermore, the number of vaccinations per day is rising steadily, as the average number of doses administered increased from 1,5 million in February to 2,7 million at the end of March
In Europe, the fight against the pandemic has been less successful than in the US: barely 10% of the population have been immunised against the virus. It should be noted, however, that the number of daily vaccinations is also accelerating, giving cause for greater optimism in facing the months that lie ahead.
With the economic recovery largely dependent on the health situation, the US is reaping the benefit of this optimism, and this is reflected in economic figures that have generally exceeded economists' expectations over the last few weeks. The successive stimulus plans, which are particularly positive for US growth, are also worth noting. Moreover, the very high level of household savings will continue to support the economy via consumer spending.
In short, the situation is improving overall, although we are still a long way from achieving collective immunity and a full economic recovery in all sectors. Growth prospects have been demonstrated and even revised upwards in the US, giving us confidence in our decision to favour equities over bonds. In addition, we are taking advantage of the return of cyclicality in our portfolios through our sector allocation. Our geographical preference is for the US and China as the main sources of economic growth this year.
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