This Friday 30th March is not only the end of the week but also the end of the first quarter of the year. Banks and funds, as well as business generally, are fixated on breaking down performance by quarters, so the end of a quarter can be a useful time to take stock, rebalance, and take some measurements. At the time of writing, there are about one and a half days of trading left in the quarter, but it is possible to take some provisional measurements and see if they are telling us anything.
This quarter will be remembered as a time when a strongly rising, mature and tech-led bull market in stocks hit some wild volatility, possibly signaling the beginning of a bear market. Most analysts would say that by the usual metrics, we are not in a bear market yet. However, the benchmark S&P 500 Index looks like ending the quarter down by almost 3%. This is the first negative quarter in that index since the end of 2015, which will be psychologically significant.
Turning to Forex, the U.S. Dollar Index is down over the quarter by about 1.85%. Most of this loss took place in January. Since then the Dollar has been consolidating and not truly falling much further, at least not as an index. The British Pound is up against the U.S. Dollar by 4.19%, the Euro by 2.59%, and the Japanese Yen by 5.83%. This is interesting as it shows us that the major currencies are relatively strong, because the Dollar is falling against all of them by significantly more than it is falling against a wider basket of currencies.
Commodities are mostly unchanged. There have been large swings in Natural Gas, while Gold and Silver are little changed, although Silver is weaker than Gold and has been for some time. One of the very few commodities showing a relatively steady gain or loss is Crude Oil, which is up by almost 7% over the quarter.
These performances I have outlined here are the “mood music” of the market. What we have is volatility, a generally weak U.S. Dollar, a shaky and very volatile stock market which is starting to flirt with the bears, and strength in Crude Oil, the British Pound, and the Japanese Yen. Of course, a new quarter is one of the key moments where these patterns often start to change, so keep a close watch on what happens over the next few days as we move from the 1st quarter into the 2nd quarter.