March In Review: Gold Shines As Tech Suffers

This story features MACQUARIE GROUP LIMITED, and other companies. For more info SHARE ANALYSIS: MQG

Through volatile day-to-day trading sessions, March proved yet another tough exercise to bear for the local share market.

-Ahead of US import tariffs, Aussie equities followed US equities down in March
-Gold and utilities functioned as safe havens
-Stocks on high PE multiples hardest hit
-Macquarie believes market sentiment has a lot further to fall
-Seasonal pattern offers hope for April bounce

By Rudi Filapek-Vandyck, Editor

March proved kinder for Aussie equities than February, but then losing -4.22% ex-dividends over 28 days is not something that comes along very often outside of the world facing a serious crisis.

This year’s convergence of negative factors includes too much optimism (both relating to Trump and AI) in combination with deflating sentiment towards the next industrial revolution and the realisation that US import tariffs will weigh on global economic growth prospects, or worse.

The one stand-out positive for Aussie investors is the Australian market is finally outperforming major indices in the US. The decade past has mostly offered the opposite trend. The fact it happened by weakening less probably won’t make too many investor hearts beat any faster.

The flipside of that observation is the Australian share market noticeably underperformed markets in Latin America, throughout Asia and in Europe.

March volatility proved mostly absent in bond markets. The US ten year yield moved to 4.24% at month’s end from 4.23% at the beginning and the ten year in Australia moved to 4.38% from 4.30%.

The AUD oscillated mostly around 63c against the USD, reaching a high of US63.85c on March 17, but ultimately broke down and fell as low as US62.23c. By month’s end, the Aussie was almost back at US63c.

Year-to-date Return Now Negative

Through volatile day-to-day trading sessions, March proved yet another tough exercise to bear for the local share market. In the end, the ASX200 lost -3.4% (total return, thus including dividends). A second negative month means year-to-date total return is now in negative territory to the tune of -2.8% (as at March 31st).

When measured from the all-time record high, the Australian market slumped by -8.3% while the S&P500 weakened by -8.7% suggesting Australia pretty much followed the US trend like a loyal twin (no divergence there, irrespective of obvious differences).

For the financial year that started in July last year, the local numbers look slightly better than for the S&P500 and the Nasdaq.

Who would’ve thunk it? In particular after the election of Donald J Trump in November?

Losses in February and March have turned Q1 2025 into the second consecutive negative quarter for the ASX200, following on from an already deflating end to calendar year 2024.

The last time the local index suffered two negative quarters in a row was back in late 2022 when resetting bond yields continued to wreak havoc across the globe and investors were preparing for the inevitable US economic recession that never arrived.

Hunting For Havens

Given high levels of macro-uncertainty and day-to-day market volatility, it should not surprise momentum in March stuck firmly with cheaper priced and defensive havens.

The local index for gold stocks shone through rising 13.77%. Utilities clocked off with a positive return of 1.21% ex-dividends.

In between sits the Materials sector, up 1.78%, firmly carried by those outperforming gold producers, but there was further support from inflation-protection seeking strategies, as well as from the fact those American import tariffs provided short-term support for the likes of copper, nickel and zinc (with international cargoes hurrying to get as much material onto US soil before tariffs kick in).

Other areas of support for commodities include ongoing stimulus from China plus a sharp increase in defense spending in Europe. Macquarie points out the fact Value as a factor strongly outperformed Growth in March can be largely attributed to Materials, and the gold sector specifically.

The second best performing Factor was Dividend Yield. Again, hardly a surprise within the context. Large Caps beat Small and Mid-Caps. Momentum proved the second worst Factor, with Quality on third last position.

There was no such joy for iron ore, for coal (both), or for uranium, while traders in energy markets have seen all colours of the rainbow.

For the financial year running (post July 1) the energy sector remains the worst performing on the Australian share market, as investor optimism takes hit after hit from either the US administration’s desire to see a permanently lower oil price or by growing market concerns about the economic outlook post US tariffs.

When measured over the past twelve months, the Materials sector is still the second worst performer on the ASX, only beating Energy. Financials as a sector retreated -3.9% in March, with the banks limiting short-term weakness to -2.9%. Diversified Financials, of which many are leveraged to sentiment and direction of markets, weakened by -11.3%.

Insurers proved the more steady havens in March. Macquarie Group ((MQG)) and CommBank ((CBA)) were among the largest contributors to the ASX200’s negative performance for the month.

Growth vs Multiples

The hardest hit throughout March, as they were in February, were stocks trading on higher PE multiples, also known as last year’s Winners when Tech, Growth, AI and Data Centres functioned as the popular buzz words for momentum seeking investors.

In terms of average PE multiples, the local tech sector continues to stand head-and-shoulders above the rest of the market (average PE is 77x) but this combines with the observation this same sector continues to represent the highest growth forecasts for the year ahead.

The only sector with negative growth forecasts for the twelve months ahead is, yes, indeed, the Energy sector.

Historically, the seasonal pattern is for March to usually put in a negative performance in Australia, while April tends to be the third best if history can be investors’ guide in 2025. Traditionally, only July and November tend to generate a higher return than April, on average.

The seasonal pattern for the S&P500 looks similar, with March usually not looking flash (though positive on average) and with November beating July, and April sharing third spot with October.

This year’s slaughterfest in the US might therefore function as a promising omen for your died-in-the-wool optimists in markets. April, it has to be said, had started off in a positive manner, until Trump’s Rose Garden event on self-declared Liberation Day arrived earlier today.

Lists showcasing the best performances in March have gold stocks including Newmont Corp ((NEM)), Northern Star ((NST)), Evolution Mining ((EVN)) and Catalyst Mining ((CYL)) prominently on top.

Others that performed well include APA Group ((APA)), Rio Tinto ((RIO)), QBE Insurance ((QBE)), Mineral Resources ((MIN)) –yes, yes!– and Orica ((ORI)).

On the negative side, Paladin Energy ((PDN)), Coronado Global Resources ((CRN)), Opthea ((OPT)), Block ((XYZ)), James Hardie ((JHX)), Pro Medicus ((PME)), Car Group ((CAR)), Goodman Group ((GMG)) and WiseTech Global ((WTC)) delivered some of the worst performances for the month.

Underlying Stats & Data

Weaker share prices have pulled down the average PE ratio for the ASX200 to below 17x, which still looks high given the ten-year average fluctuates around 16x these days. More weakness in April might see both averages converge shortly.

At the same time, the Australian share market is also facing lower earnings forecasts, which, paradoxically, pushes up the average PE ratio while share prices are falling.

Earnings forecasts are receiving more reductions than upgrades (net negative), with the Australian market seemingly destined to suffer a third successive year of net negative EPS growth.

One reason for optimism could relate to the fact consensus is forecasting a positive growth year for FY26, but how much impact should we expect from import tariffs? In Australia, international industrials remain responsible for most of the growth on offer.

On number’s crunched by analysts at Morgan Stanley, 46% of ASX200 stocks are now trading below their 200 moving average compared with only 19% by late March last year. Also, the local healthcare sector is now trading at a -12% discount to the sector’s 10 year average, while Australian bank shares remain 28% above their 10 year average.

Macquarie’s proprietary FOMO meter, designed to measure investor sentiment, has now descended into negative territory at -0.19. Macquarie strategists see this measure weakening further to below -1.

When this happens, it’ll function as a Buy signal, is the suggestion made.

For more details and insights into March and preceding history, see the tables below.

ASX100 Best and Worst Performers of the month (in %)

ASX200 Best and Worst Performers of the month (in %)

ASX300 Best and Worst Performers of the month (in %)

ALL-TECH Best and Worst Performers of the month (in %)

All index data are ex dividends. Commodities are in USD.

Australia & NZ

The World

Metals & Minerals

Energy

Technical limitations

If you are reading this story through a third party distribution channel and you cannot see charts included, we apologise, but technical limitations are to blame.

Find out why FNArena subscribers like the service so much: “Your Feedback (Thank You)” – Warning this story contains unashamedly positive feedback on the service provided.

FNArena is proud about its track record and past achievements: Ten Years On

Click to view our Glossary of Financial Terms