GoalsGetter Monthly Commentary March 2025

Global equity markets were weaker over March, giving up the gains from January and early February to finish the first quarter of 2025 in the red. Global bonds (hedged to NZD) also fell in March, but did post solid gains for the first quarter. Politics dominated the narrative in March, with announcements on upcoming tariffs and trade policy changes from the new US administration making headlines. Fears that changes to global trade structures could lead to higher inflation and lower growth in the short term saw equity markets move lower.

The MSCI ACWI (NZD Hedged) was down -4.5% for March and down -2.2% for the quarter. The Kiwi was stronger versus the US Dollar over the month and the quarter, and weaker over the quarter against the other majors. Returns for the MSCI ACWI (in NZD terms) were similar to hedged, down -5.0% for the month, and down -2.4% for the quarter. The Bloomberg Global Aggregate Index (NZD Hedged) was down -0.5% for March, and up +1.1% for the fourth quarter. Closer to home NZ equities followed a similar pattern to their global counterparts, moving lower in both March (-2.4%) and over the first quarter (-6.2%).

The US Federal Reserve (Fed) kept the federal funds target range between 4.25-4.50% during its March meeting. The Fed adopted a slightly dovish tone and communicated a willingness to respond to growth risks if they emerge. The Bank of England kept rates on hold while in Europe, the European Central Bank cut rates by 0.25%. Meanwhile, the Bank of Japan kept rates unchanged and maintained its hiking bias.

The first quarter of 2025 saw a reversal of the trend of the last couple of years in terms of sector and regional leadership. Information Technology (-11.8% for the quarter), Consumer Discretionary (-7.8%) and Communication Services (-2.7%) all underperformed the broader market. Collectively the ‘Magnificent 7’ growth focused mega-cap names were down over -16% for the quarter. Energy (+8.3%), Utilities (+5.9%) and Financials (+5.4%) all comfortably outperformed the broader market. Regionally the US and Japan both underperformed the broader global market for the quarter. China (MSCI China +13.1%) and Hong Kong (Hang Seng (+15.3%) delivered very strong returns for the same period. China based technology firm Deepseek released a new artificial intelligence model that they claimed could match other companies’ versions while using significantly less computing power. President Xi also held public meetings to endorse the private sector as “crucial for economic revival” in China and pledged more supportive policy from the government.