Economic Update March 2019
Summary
Global equities recover but uncertainties persist
For the most part, global equity markets continued to recover through February. And, while no advanced economy’s equity market is yet to break through its 2018 peak, it has become clear that the sell-off late in the year was overdone.
Bolstering markets in February were a range of both economic and geopolitical concerns that either went away or have become slightly less worrisome. These included the US Government shutdown ending and it being unlikely to threaten again until
late September; progress on trade talks between the US and China steadily improving over the month, with President Trump alluding to “substantial progress” being made; further US-North Korean peace talks; the US Federal Reserve
(Fed) continuing to reassure markets of its more measured approach to policy tightening and the reduction in the size of its balance sheet; and a generally solid US earnings season amidst a more challenging global environment.
The nature of the sell-off and subsequent recovery across developed markets attests to the global macro and sentiment-based nature of the move in terms of its profile – risk off and then risk on. However, it is notable that the dispersion
in overall performance of developed economies’ equity markets during 2018 and until now was broadly along the lines of economic growth. US and Australian markets outperformed, while markets in the UK and Eurozone underperformed. The
Japanese market, after a period of outperformance, is now broadly tracking in line with European markets.
Global: Equity market performance
Equities recover as relative calm sweeps back over markets

Source: IFM Investors, MSCI, Macrobond EAFE: Europe, Australia & Far East
The reduced concern around geopolitical issues and, in particular, the re-emergence of the ‘Fed Put’ have supported markets and diminished volatility to the lowest levels observed since early October. This suggests a relatively sanguine
appraisal by investors of the still uncertain issues facing the global economy and political environment.
While the early gains in equity markets at the outset of 2019 may have, at least in part, offset the losses that defined late 2018. The question will remain for how much longer they can persist should global growth continue to decelerate throughout
the course of the year.
About the author
Chief Economist
Alex Joiner, PhD
Joined in 2016
Alex Joiner is Chief Economist at IFM Investors. He is responsible for the firm’s economic, financial market and geopolitical risk analysis that is key in IFM’s investment process. In this capacity he engages with IFM’s domestic and global clients on macro-investment trends and themes. He is a frequent commentator on economic and markets via traditional and social media and regularly speaks at public forums and conferences. He has over two decades of professional experience in economic and markets and prior to joining IFM was the Chief Economist at Bank of America Merrill Lynch (Australian & New Zealand) after being a senior economist at ANZ Bank. He holds a First Class honours degree in Economics and a PhD in Econometrics from Monash University. Alex is also committee member of the Australian Business Economists.