The S&P/ASX 200 Index (ASX: XJO) fell 3.4% in terms of total returns in March, with defensive stocks outperforming growth shares.
In a new note, top broker Macquarie said the market de-rated in March "as investors anticipate the impact of Trump's tariffs".
When markets are nervous, investors flock to value shares over growth shares because they feel less optimistic about the future.
The broker commenced:
Value (-1.3%) outperformed Growth (-5.4%), largely due to the selloff being concentrated in the Growth/Momentum winners of 2024.
Macquarie said a key example of an ASX 200 defensive stock that underperformed in March was Pro Medicus Ltd (ASX: PME) shares.
Healthcare is typically one of the most defensive ASX sectors.
The broker said Pro Medicus fell 21.1% because it "had been one of the biggest beneficiaries of 2024's momentum rally."
The best performer of the 11 ASX 200 market sectors last month was utilities, with a 1.5% lift in total returns.
Utilities are considered a safe haven during market volatility.
The sector is made up of just 21 companies, most of which are electricity, gas, or water suppliers.
They have reliable earnings, which makes them a defensive investment.
The next best ASX sector was materials, with a 0.1% decline in total returns.
Materials are notoriously volatile because they incorporate mining stocks, which move in line with commodity prices.
However, last month, commodity prices were strengthened by new stimulus in China and Europe and a 3.2% fall in the US Dollar Index.
A big factor adding strength to materials is a soaring gold price, which continues to lift ASX 200 gold stocks.
Macquarie said:
Precious Metals have been the strongest group, led by Gold (+10.6%), but Silver and Platinum are also up ~10%.
Nickel (+5.8%) and Copper (+5.0%) were the strongest in Industrial Metals, while Crude was up +2.7%.
The relative strength in commodities is also supporting the outperformance of Value over Growth.
Macquarie said gold was strong due to demand for safe-haven investments amid escalating geopolitical risks.
The metal was +10.6% (in USD) last month, while gold stocks rose +13%.
Evolution Mining Ltd (ASX: EVN) (+17.9%) and Newmont Corporation CDI (+16.0%) were the two best performers in the ASX 100, while there were a half-dozen small cap gold stocks with gains in excess of 20%.
As for the rest of the ASX sectors, consumer staples' total returns fell 1.4%, industrials dipped 2.1%, and energy fell 3% last month.
Communications dropped 3.4%, financials fell 3.9%, health lost 4.7%, and ASX REITs fell 4.8%.
Consumer discretionary shares fell 6.2%, and technology fell 9.1%.
Macquarie said:
Technology was the laggard again …
The fall last month was largely due to WiseTech Global Ltd (ASX: WTC) and their governance issues, but the March decline was broader as investors reduced high PE names, many of which are in Technology (e.g. Nextdc Ltd (ASX: NXT) -15.2%, Xero Ltd (ASX: XRO) -9.4%).
As the chart below shows, the ASX 200 began the month in the middle of a near-market correction.
A market correction is defined as a major index falling 10% from its most recent peak.
The benchmark index fell 9.43% between its all-time high on 14 February to its trough on 13 March.
After that, the market began to rebound, but in a pretty volatile way.
The ASX 200 fell largely due to fears that US tariffs may start a global trade war and lead the US economy into recession.
The ASX 200 generally takes its lead every day from the S&P 500 Index (SP: .INX).
So, as US stocks fall, ASX 200 shares follow.
Locally, investors were nervous last month about how US tariffs would impact ASX 200 shares.
We're seeing some of that play out today after the US released its 'Liberation Day' tariffs overnight.
Australian goods will be subject to a 10% tariff, with steel and aluminium facing a 25% tariff.
Many ASX-listed companies face higher tariffs because they manufacture their goods in other countries, like China.
Among the worst-hit ASX 200 shares today are Breville Group Ltd (ASX: BRG) shares, which fell by close to 12%.
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