Monthly Market Review - March 2024
In March 2024, global markets continued their upward trend, with the MSCI World Islamic Index rising by 2.67%, building on the strong performance seen in February. The Dow Jones Sukuk Index also recorded a modest increase of 0.35%, signaling a turnaround from the previous month's decline.
During the latest Federal Reserve meeting, Chairman Jay Powell acknowledged the challenges in meeting the 2% inflation target, hinting at a potential slowdown in progress following a rise in price pressures as indicated by the PCE gauge in February. The Fed's outlook points towards a cautious approach to rate cuts in 2024, highlighting the continued strength of the US economy. Powell emphasized the Fed's flexibility, suggesting that the pace of rate cuts would be contingent on future inflation data and global economic conditions. The 10-year Treasury yield remained stable at 4.2%, reflecting the market's assessment of the Fed's policy direction and its potential economic impact.
The US economy maintained its resilience, with the Manufacturing PMI at 52.5 signaling expansion. Despite a slight uptick to 3.9%, the unemployment rate remained indicative of a robust labor market. Inflationary pressures showed signs of moderation, with the Consumer Price Index (CPI) edging up marginally to 3.2% year-over-year, while core inflation slightly decreased to 3.8%. Retail sales displayed strength, with a 0.6% month-over-month increase and significant year-over-year growth of 1.5%, indicating a resurgence in consumer spending and a strengthening recovery in the retail industry.
In contrast, the UK faced economic headwinds amid challenging conditions. The Consumer Price Index (CPI) in the UK experienced a yearly decline to 3.4%, while core inflation remained notably elevated at 4.5% year-over-year, showing a monthly uptick to 0.6% following a deflationary February. Despite ongoing demand weaknesses and geopolitical tensions in the Red Sea region, the UK's manufacturing Purchasing Managers' Index (PMI) showed a slight improvement, rising to 47.5. In the Eurozone, inflation witnessed a marginal year-over-year decrease to 2.6%, with a monthly increase to 0.6% from -0.4%, signaling price volatility. Core inflation in the Eurozone also slowed down, registering at 3.1% year-over-year with a monthly increase of 0.7%.
China's economic landscape saw a slight uptick in inflation, with a 0.7% year-over-year increase in the Consumer Price Index (CPI). However, the Producer Price Index (PPI) continued its downward trend, declining by 2.7% year-over-year. However, the latest China PMI for March recorded at 50.80 has shown some signs for optimism. The unemployment rate in China increased to 5.3%, underscoring strains in the labor market and suggesting the necessity for targeted stimulus measures to support economic growth.
In Japan, the Bank of Japan (BOJ) made a significant policy shift by ending its negative interest rates policy, signaling a shift away from deflation and anticipating potential wage growth in the country.
Finally, gold rallied above US$2200/oz fueled by a combination of factors, including economic uncertainties, geopolitical tensions, and inflation concerns. As investors seek safe-haven assets amidst market volatility and the potential for rising inflation, gold has regained its appeal as a store of value.
Looking forward, markets are expected to remain responsive to changes in central bank policies and geopolitical developments, emphasizing the importance of maintaining a diversified investment portfolio and being prepared for any potential market disruptions.
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