News & Analysis

Rotation from growth to value stocks accelerates, bond yields continue to rise

31 March 2021 By Lachlan Meakin


March has been an interesting month in global markets. Everything from shipwrecks to a blown-up hedge fund to a continued rise in US bond yields has had investors scrambling to position themselves.

Global Equities

Major world indices were mostly positive with the Dow Jones and S&P 500 hitting all-time highs in the US and the DAX doing the same in European markets.

Source: Bloomberg

US Markets 

US markets saw a classic cyclical rotation as investors sold growth stocks which were the winners during the pandemic, buying up value stock and positioning instead for a global economic recovery. This is evident in the outperformance of the DOW and S&P 500 over the Tech heavy NASDAQ and Small cap Russell index, as investors sold their Amazon stock and bought Walmart.

Bond yields continued to rise during March, which raises doubt on the high future valuations of Tech giants, causing further headwinds for the NASDAQ.

European Markets

European equity markets were the strongest performers during March, with the German DAX index hitting all-time highs and the French CAC coming within a whisker of all-time highs as well. Banks and other old-economy businesses whose fortunes will benefit most from a global growth rebound performed particularly well.

This comes despite a worsening COVID situation in Europe, as investors look ahead to a potential recovery and focus on globally-focused businesses as vaccine rollouts catch up in nations such as the UK and US.


The ASX 200 has rallied over 3% to date in March. With iron ore prices remaining high and Australia’s economic recovery going well the share market has been well bid.

March saw strong GDP numbers and much better than expected employment figures released. The RBA will meet next Tuesday in their monthly rate meeting and while no change in policy is expected, investors will be watching the accompanying statement to see if any language changes due to these strong figures.


Forex Markets

March saw a much strengthened US dollar as the benchmark US 10 year bonds yield continues to climb. Climbing bond yields make the US dollar a more attractive investment, and as a result it outperformed most major currencies.

Only oil dependant currencies like the Norwegian Kroner and Canadian dollar managed to outperform the US dollar, as oil spiked during the month on increased demand due to the Suez Canal blockage.

Source: Bloomberg

Australian Dollar

The Australian Dollar performed better than most major currencies, with stronger than expected GDP and a blockbuster employment report putting pressure on the RBA to reassess their target of 2024 before a rate-tightening cycle starts again.

AUSUSD is continuing to trade in its 2021 range of ~0.76c -0.78c US. Despite US dollar strength the 0.76 support level has so far held strong. Next Tuesday’s RBA meeting will be closely watched for any clues as to future rate movements.

Source: GO MT4


Spot Gold prices continued their slide as the global economy improved and US dollar strength pressured prices.

With the markets in risk on mode, XUAUSD hit its lowest point since June 2020 as investors continued rotating out of safe haven assets.

Source: GO MT4


Crude oil had a volatile month, with US crude spiking above $68 USD per barrel on continuing economic recovery and the unlikely Suez Canal blockage constraining supply.

Concerns over Europe’s new COVID lockdowns dampening demand sent prices lower, with US crude coming into the last day of the month slightly negative for March.

Source: GO MT4

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