Equity markets recorded an impressive rebound during March clawing back some of the ground lost so far in calendar 2022. The Australian market returned a healthy 6.9% due to strong commodity prices which boosted our resource sector and led to substantial earnings upgrades for our major mining companies.
Overseas markets posted solid gains with the US market up 3.7%, the UK 2.5% and Germany 3.7% however the Chinese market fell 7.7% on news of a major COVID outbreak in Shanghai which threatens to curtail manufacturing activity.
A feature of financial markets since the Russian invasion of Ukraine has been the strength of commodity-based markets and currencies such as Australia, at the expense of commodity importing countries such as many European nations, and countries which pose geopolitical risks such as China. With no sign that inflation is abating, bond markets sold off with US 10-year treasury yields increasing by 51 basis points to close at 2.39% while Australian 10-year bonds increased by 77 basis points to finish at 2.86%.
Commodity prices were once again strong, particularly natural gas that was up 18.7%, iron ore up 8.1% while nickel was once again the standout base metal performer, up 29%. The oil price took a breather from its recent strong advance falling by 7% to close at just over US $105 dollars. Not surprisingly, the strength in commodity prices saw the AUD appreciate by 3.5% to finish at US75 cents.