Author: Nadine McGrath

• Australia’s S&P/ASX 200 records its first back-to-back monthly fall since October 2023, down 3.39% in March
• Ten out 11 S&P/ASX 200 sectors posted losses with utilities the only sector in the black, up 1.52%
• Metal Powder Works rises 176% in first month on the ASX, making its IPO on March 11 through reverse merger with K-TIG Limited

Australia’s S&P/ASX 200 dropped 3.39% in March, following a 3.79% decline in February, marking its first back-to-back monthly fall since October 2023, according to VanEck Asia-Pacific CEO and managing director Arian Neiron.

Volatility rose across the board as economic impacts of impending tariffs and global geopolitical tensions weighed on global markets.

The S&P 500 tumbled 6% in March – its largest monthly loss since December 2022, according to S&P Dow Jones Indices (S&P DJI).

Aussie small caps fell 3.60% with mid-caps down 3.52% and emerging companies the best performer but still in red, falling 1.34%  in March.

Investors rotate to Europe in another risk-off month

BetaShares chief economist David Bassanese said concerns over US tariffs led to another risk-off month in March, with equity prices generally lower.

“Recent equity market declines have improved global equity valuations, though they remain relatively elevated,” he said.

He said the “great rotation” continued within global equity markets, with value and non-US regions outperforming growth and the US again in March.

Neiron said investors were now seeking value beyond the world’s largest economy.

“Value companies outperformed, and investors rotated away from the US to the more attractively-priced stocks in Europe,” Neiron said.

Bassanese said there was little movement in monetary policy expectations in either the US or Australia over the past month despite continued equity market volatility.

The Reserve Bank of Australia (RBA) made its first rate cut in four years in February but left the cash rate unchanged at 4.1% at its April meeting yesterday, awaiting clear confirmation that inflation was back in its 2-3% target range.

“Markets continue to expect around two rate cuts in each country this year,” Bassanese said.

He said recent equity market declines have improved global equity valuations, although they remain relatively elevated.

“Expected earnings growth is fairly broad based across sectors, though with particular strength in technology and communications,” he said.

The Aussie dollar was modestly stronger in March, rising 0.6% from 62.1 to 62.5 US cents.

“The strength in the Australian dollar largely reflected a weaker US dollar in global markets, with the USD Index down 3.2%,” Bassanese said.

While the Aussie dollar edged higher in March, the price of Bitcoin, the world’s largest cryptocurrency, declined. At the time of writing, after an eleventh-hour surge from a US time-zoned perspective, Bitcoin was trading at around US$84,000. Overall, it moved down 2.3% in March. It could have been worse, considering how poorly tech fared globally in the latter stages of the month.

Tech drags on market

Unlike February, where the big banks were the worst performers, tech (-9.66%) and consumer discretionary (-6.14%) were the biggest drags on the ASX in March.

“As has been the case globally, the growth/technology areas have tended to be hardest hit locally during the current equity sell-off,” Bassanese said.

Neiron said this reflected a broader risk-off sentiment that was driven by concerns over tariffs, lower growth and higher inflation expectations.

The best performers for March were utilities, up 1.52%, materials down 0.32% and consumer staples down 1.46%.

“International equities, represented by MSCI World ex Australia, followed the same pattern as domestic stocks, falling 4.67% due to drops in tech and consumer discretionary,” Neiron said.

Momentum continues correction, fixed income resilient

All reported Australian factor indices were in the red in February. Momentum – the best-performing factor in 2024 – continued its correction, declining by 7% for two consecutive months, according to S&P DJI.

In contrast, defensive factors, such as high dividend and low volatility, held up relatively better.

“Volatility rose across the board, in both implied and realised terms, reflecting heightened uncertainties surrounding impending tariffs, geopolitical tensions and their potential economic impact,” S&P DJI said.

Known as the fear gauges, the S&P/ASX 200 VIX surged to 14.9%, while the S&P 500’s VIX closed March at 22.3%.

S&P DJI said fixed income indices remained relatively resilient, with the S&P/ASX Australian Fixed Interest 0+ Index staying in positive territory.

The 50 best performing ASX stocks in March

Metal Powder Works (ASX:MPW) rose 176% in its first month on the Aussie bourse, having made its IPO on March 11 after raising $10 million at 20 cents per share through a reverse merger with formerly listed K-TIG Limited.

MPW has developed its patented DirectPowder process, which offers a new approach to powder production in additive manufacturing. The tech has already been tested across various methods like 3D printing and laser fusion, with MPW counting big names like the US Department of Defense, Westinghouse, and Toho Titanium as customers.

Discount store chain The Reject Shop (ASX:TRS) was up 97% in March after following a $259 million takeover offer from Dollarama, a Canadian giant in the bargain basement retail chain store business.

TRS said it had entered into a binding scheme implementation agreement with Toronto Stock Exchange-listed Dollarama for the takeover price of $6.68 per share, representing a 112% premium to the company’s most recent closing price.

The takeover has the backing of the Aussie company’s largest shareholder, Kin Group, controlled by billionaire Raphael Geminder. If approved by its broader shareholders, the deal is expected to be completed in the second half of this year.

RareX (ASX:REE) rose 171% in March after an unexpected gallium discovery elevated its Cummins Range project to the most advanced gallium deposit in Australia with historical drill holes containing values up to 6826 g/t Ga203.

The critical metal, a key material in semiconductor chips currently subject to export bans from its main producer China, could transform Cummins Range, already one of Australia’s largest pre-development rare earths and phosphate projects.

Gallium assays were identified in the upper 80m of the carbonatite pipe, occurring alongside high-grade rare earths, phosphate, and scandium mineralisation, after RareX assessed historical regolith RC drilling conducted between 2007 and 2012 by Navigator Resources and Kimberly Rare Earths.

Lykos Metals -LYK (ASX:) was up 90% in March after raising ~$400,000 via a placement of ~44,42 million fully paid ordinary shares at 0.09 cents (A$0.009) per share.

The placement issue price is at a 18.2% discount to the last close and includes one free attaching unlisted option for every two shares issued, exercisable at 2 cents ($0.02) with an expiry date of three years from the date of issue and subject to shareholder approval.

LYK said funds would go towards exploration and development of its existing projects along with new opportunities and working capital.

The 50 worst performing ASX stocks in March

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