March Monthly Market Review
- Anthony Walters
- Apr 1
- 3 min read
Welcome to our Monthly Market Review for March 2025, where we unpack the key economic events, investment trends, and global market movements that shaped investor sentiment. This month’s update highlights rising inflation pressures, shifting interest rate policies, and the escalating impact of U.S. trade tariffs on world markets. Whether you’re following market updates, economic outlooks, or portfolio performance, this review offers a clear snapshot of what’s driving change—and what may lie ahead.
Global Markets Under Pressure: Tariffs, Inflation, and Rate Cuts
Inflation expectations rise in the UK and US
Europe cuts interest rates again
Few market winners amid challenging ‘tariff’ backdrop
The Balanced portfolio produced a negative return in March (-2.09%) against a backdrop of increasing US tariffs, which have the potential to ‘upend’ world trade.
Inflation and Interest Rates.
UK.
British inflation slowed more than expected in February, bringing some relief to consumers ahead of a likely pick-up in price growth.
Consumer prices rose by 2.80% in annual terms in February after a 3.00% increase in January, the Office for National Statistics said, as clothing and footwear prices fell for the first time in more than three years.
"February's slowdown is a false dawn as notable near-term price rises are already baked in, with next month's jump in energy bills and national insurance likely to push inflation close to 4.00% sooner rather than later," Suren Thiru, Economics Director at accountancy body ICAEW, said.
U.S. Federal Reserve.
The Federal Reserve held interest rates steady at 4.50% during its March 2025 meeting, marking the second consecutive month without a rate change. This decision follows a series of rate cuts that began in September 2024, aimed at countering slower economic growth and elevated inflation. The Fed's latest projections indicate that core inflation, excluding volatile food and energy prices, is expected to rise to 2.80% by the end of the year, up from 2.50%. This increase has been attributed to the impact of recent U.S. tariffs and retaliatory measures.
European Central Bank (ECB).
In the euro area, annual inflation decreased slightly to 2.20% in March 2025, down from 2.30% in February. This decline was primarily driven by lower energy prices, which fell by 0.70% compared to a 0.20% increase in the previous month. However, inflation in services and food, alcohol, and tobacco remained relatively high, contributing to the overall inflation rate. The European Central Bank (ECB) responded to these inflation dynamics by lowering its key interest rates by 25 basis points, aiming to support economic growth and ensure inflation stabilises around its 2.00% target.
Market performance.
The rally in the Financials sector continued to pay dividends, this time in Norway where the MSCI Norway market gained over 8.00%. DNB Bank (+5.55%) and Equinor (+13.08%) made strong gains and comprise almost 40% of the Norwegian index.
Elsewhere in Scandinavia, Denmark fell by over 17.00% as major constituent, driven by the 23.38% fall in Novo Nordisk, following disappointing results from its phase III study for a new weight loss drug called CagriSema.
The Czech Republic gained almost 12.00%, driven by gains in CEZ energy company after reporting positive earnings.
Taiwan fell by 13.70% as Taiwan Semiconductor Manufacturing Company (TSMC), a major constituent of the index, reported lower-than-expected earnings, which significantly impacted the overall index.
Sector performance.
The India/Indian Subcontinent gained over 6.00% after falling by 10.00% in the prior month, The year-to-date trend suggests that positive performance in March was due to mean reversion, rather than a change of trend.
The Technology sector continues to be a challenge, falling by 10.22% in March, thanks to selling pressure facing richly priced tech companies, amid changes in world trade and an uncertain economic outlook.
Summary.
The most important part of this update is what followed. At the time of writing, major indices are in bear market territory now, because of reciprocal trade tariffs implemented by the US. Although the announcement of these tariffs gave the market certainty in the level at which they would be applied, uncertainty abounds as some nations move to renegotiate terms with the US. Others have moved to apply even higher tariffs, sparking the beginning of a trade war, in which there are no real winners.
One thing is likely, although not itself sure: the US Federal Reserve could well be forced to cut interest rates sooner and to a greater extent than previously forecast, to support the US economy
Sources.
Anthony Walters - Head of ESG at Clever Adviser Technology Ltd (Clever)
The ‘Balanced portfolio benchmark’ is the UT Mixed Investment 20-60% Shares Sector.
March 2025 Fed meeting: Interest rates kept steady, slower economic growth projected, JP Morgan, 20/03/2025
Euro area annual inflation down to 2.2%, Eurostat, 01/04/2025
UK inflation cools more than expected in February, but fresh climb expected, By Andy Bruce and William Schomberg, Reuters, 26/03/2025
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