Market index returns

Month to date since February 28, 2025 as of March 31, 2025

Index definitions: Global Real Estate = FTSE EPRA/NAREIT Developed Index; Global Infrastructure = Dow Jones Brookfield Global Infrastructure Index; Natural Resource Equities = S&P Global Natural Resources Index; Commodity Futures = Bloomberg Commodity Index; TIPS = Barclays US TIPS Index; Global Equities = MSCI World Index; Real Assets Index = 30% FTSE EPRA/NAREIT Developed Index, 30% Dow Jones Brookfield Global Infrastructure Index; 15% S&P Global Natural Resources Index; 15% Bloomberg Commodity Index, 10% Barclays TIPS Index. Source: Bloomberg, DWS. Past performance is not indicative of future results. It is not possible to invest directly in an index.

Market commentary:

In March, global equity markets transitioned from the Trump Bump to an uneasy mood ahead of Trump’s ‘liberation day’ for U.S. trade. Global equity markets climbed off the year-to-date low touched on March 13th, after declining nearly 8%, but still ended the month 4% lower. U.S. equities went through a full correction with the S&P 500 falling 10% in mid-March before closing the month down 5.6%. It remains to be seen whether this was just a temporary correction or if equities will take another step lower. Within global equity markets, only the Energy and Utilities sectors posted positive performance, while the Technology, Consumer Discretionary, and Communications sectors fell the most to trail the market. The Real Assets Index outperformed Global Equities on the strength of Global Infrastructure Securities, Commodity Futures, and Natural Resource Equities. Conversely, Global Real Estate Securities and U.S. TIPS trailed the Real Asset Index.^[1]

Among other indicators we track, credit spreads widened across the credit spectrum, with IG spreads rising 7 bps (basis points) and HY spreads rising 58 bps. For the month the dollar was weaker once again, down 3% as measured by the DXY index, while oil prices rose to $71.48 per barrel. Gold prices continued their strong run, rising $266 to close out the month at $3,124 per ounce. The VIX, an index of expected S&P volatility, rose 14% to end the month at 22.3. Inflation breakevens were basically unchanged in the 5-year and 10-year segments for the month while nominal yields fell in the short-end and belly of the curve (1-7 year) and rose in the long-end (30-year).^[1]

Why it matters: Facing disruption in financial markets, trade flows, and corporate revenues, investors need to stay on their toes to factor in new information and potential outcomes. We continue to monitor the hard data, but also expectations and sentiment, as views and beliefs can translate into actual activity, which is eventually revealed in the hard data.

Macro Dive: We will review soft data for March, employment statistics, and a roundup of European inflation.

• A global mixed bag: PMI data compiled by S&P Global Market Intelligence presented a mixed bag as output growth ticked higher in March, while confidence dimmed. In the U.S. we saw an acceleration in services sector activity as the index moved to 54.4. The U.S. composite output index rose to a three-month high of 53.5 this month, up from 51.6 in February. However, sentiment about prospects over the coming year slid to the second lowest level since 2022. "Firms’ costs are rising at the steepest rate for nearly two years, driven by higher tariffs, labor costs, and federal spending cuts, with manufacturers passing these higher costs onto customers,” Bloomberg summarized. A pair of regional Fed surveys also showed weakening confidence for March. The U.S. Empire State Manufacturing Survey of General Business Conditions, conducted by the Federal Reserve Bank of New York, fell to -20.0, well below the prior reading of 5.7. In addition, the Philadelphia Fed Business Outlook survey was also softer, coming in at 12.5, down from 18.1. In Europe, the European Purchasing Manager Indices (PMI) came in slightly better than expected, confirming a slight upward slope. In contrast, Japan reported the first fall in output since last October, while manufacturing confidence and services sentiment also weakened.^[2]
• The Consumer’s Pulse:  The jobs market in the U.S. has thus far shown only hints of weakness via persistent initial jobless claims of roughly ~225k, and continuing claims persevering at an average of ~1872k. The change in nonfarm payrolls for March was 228k, up from the prior revised figure of 117k, and above estimates of 140k. The increase was almost entirely driven by the service sector. The unemployment rate ticked up to 4.2% as the labor force participation rate moved up to 62.5%, from 62.4%. Sentiment surveys have been dismal as of late, and the newest release from the Conference Board proved no exception. Consumer confidence fell to its lowest level since January 2021 and expectations for the future slumped to a 12-year low. Sentiment continues to be buffeted by economic and policy concerns. Until there is further clarity on the tariffs, and their true impact, confidence amongst U.S. consumers is likely to remain fragile.^[3]
• News from Europe:  Euro-area year-on-year (yoy) inflation was 2.2% in March 2025, down from 2.3% in February 2025. Despite volatility in recent readings, the rise in inflation has turned out to be lower than expected. Among all countries in the Euro-Zone Estonia, Croatia and Slovakia reported the highest rates at 4.3% yoy each, whereas France and Luxembourg recorded the lowest. There was a weakening of service inflation pressure, the largest component, which could aid the ECB in reaching its 2% inflation target. Moving on to Europe's largest economy, Germany, the rise in the German IFO business sentiment index suggests that a gradual cyclical rebound is underway in the country. The IFO increased in March to 86.7, from 85.2 in February, driven in part by the recently announced large fiscal stimulus plans. However, potential effects from the U.S. tariffs on the exporting nation remains to be seen.^[4]

Real Assets, Real Insights: This week we will look at an IPO launched in a tough market, political influence on infrastructure deals, and potential threats to U.S. coffee supplies.

• Time to unpack (Real Estate): SmartStop Self Storage REIT Inc. (SMA) offered an IPO on April 1st. The company priced 27 million shares at the lower end of its marketed range, pricing at $30. At that price the market value of the company was $1.54 billion, based on the $810 million raised. Even still, the listing launched against a poor equity market backdrop where IPOs have not generated significant excitement. The company, founded in 2009, is the 10th largest self storage company in the U.S with over 200 storage facilities in the U.S. and Canada, offering over 16.7 million square feet of rentals. Revenues were $237 million for 2024 and $233 million for 2023, but produced a net loss of $18.4 million and $2.7 million, respectively.^[1]
• Ships in the night (Infrastructure):  CK Hutchison Holdings Ltd. (Hong Kong) has delayed signing a deal to sell the Panama Canal ports to a group of U.S. investors. The deal has been delayed but not cancelled. The sale drew the ire of officials in China as they view it as a threat to their trade and shipping interests, while U.S. officials looked forward to regaining control of the asset. The Chinese government exerted pressure on the firm regarding the transaction on the grounds of potential anti-trust or security violations and even paused transactions between the company and state-owned enterprises. Further stirring the pot for U.S. President Trump, the railway linking the ports was sold to A.P. Moller-Maersk A/S, via the Danish shipping company’s port operator APM Terminals. The asset was sold by the joint-venture of U.S.-based Lanco Group and Canadian Pacific Kansas City as they refocused on core North American business.^[1]
• Trouble Percolating (Commodities): The recent U.S. tariffs could threaten coffee supplies from Vietnam. The 46% tariff levied on the world’s leading producer of robusta coffee, the type used in espresso and instant drinks, could disrupt global flows. U.S buyers have might have fewer sourcing options given the country is the third largest supplier to its market, with limited affordable options from other regions. This comes at a time when coffee prices have already had a strong run over the past year given poor weather in producing regions. Switching to arabica beans isn’t feasible for all coffee types and replacing Vietnam’s consistent quality and volume will be difficult.^[1]