{"id":981,"date":"2023-04-06T13:35:47","date_gmt":"2023-04-06T13:35:47","guid":{"rendered":"https:\/\/advisor.wellington-altus.ca\/wagner\/?p=981"},"modified":"2023-04-11T21:00:54","modified_gmt":"2023-04-11T21:00:54","slug":"last-month-in-the-markets-a-difficult-month-to-endure","status":"publish","type":"post","link":"https:\/\/advisor.wellington-altus.ca\/wagner\/2023\/04\/06\/last-month-in-the-markets-a-difficult-month-to-endure\/","title":{"rendered":"Last Month In The Markets \u2013 A Difficult Month To Endure"},"content":{"rendered":"

Click here to download this article as PDF.<\/a><\/p>\n

Last Month in the Markets: March 1st <\/span>\u2013 31st<\/span>, 2023<\/h4>\n

\"Last<\/p>\n

\u00a0<\/span><\/span>(source: Bloomberg <\/span>https:\/\/www.bloomberg.com\/markets<\/a>, MSCI <\/span>https:\/\/www.msci.com\/end-of-day-data-search<\/a> and ARG Inc. analysis)\u00a0<\/span><\/span><\/p>\n

What happened in March?<\/h4>\n

\u00a0<\/span><\/span>Last month was difficult to endure for investors concentrated in North American equities, especially those with significant holdings in financial services, which includes many Canadians. By the end of March, the TSX finished almost where it began the month, and the U.S. equities indexes rose 2 to 6\u00bd percent.\u00a0<\/span><\/p>\n

Rates of interest and inflation continued their influential roles, but the failure of two U.S. banks, concern over many more institutions, and a Swiss government-led acquisition of Credit Suisse by UBS consumed most of the attention as markets rose, dropped swiftly, and then steadily regained (or improved) their position.\u00a0<\/span><\/p>\n

\"Equities<\/p>\n

\u00a0<\/span><\/span>(source: Bloomberg https:\/\/www.bloomberg.com\/markets<\/span>and<\/a> ARG Inc. analysis)\u00a0<\/span><\/p>\n

March 2023 will be remembered more for its turmoil than the results posted by month-end:\u00a0<\/span><\/p>\n

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  1. On March 7th<\/sup>, U.S. Federal Reserve Chair, Jerome Powell, testified in Washington where he reiterated the central bank\u2019s commitment to reduce inflation to the target of 2%. Coupled with the strength of the U.S. economy, \u201cwhich suggests that the ultimate level of interest rates is likely to be higher than previously anticipated.\u201d Despite the other good news for the economy (employment, GDP), continuing to increase interest rates can lower the value of equities as the fear or likelihood of recession increases. Watch Powell video<\/a><\/li>\n
  2. Much attention has been paid to the effect on consumers from rising interest rates, but financial institutions can be exposed, too. As short-term rates rise, and banks are forced to pay current rates on deposits, their long-term investments at lower rates of return can cause a narrowing of margins. A confidence-crisis and bank-run <\/a>resulted, and regulators in California shut down Silicon Valley Bank on March 10th<\/sup>. This led to additional scrutiny and wider worries for bank solvency and was amplified when the FDIC shuttered Signature Bank <\/a>on March 12th<\/sup>. The confidence crisis in banking triggered a decline for equity indexes. SVB Fallout Spreads<\/a><\/li>\n
  3. Equity markets began a tentative recovery after the U.S. Treasury Department, Federal Reserve and Federal Deposit Insurance Corporation added increased protections for depositors and introduced a new borrowing facility to allow banks to meet short-term cash Joint release<\/a>\n