Wishing you a productive and profitable month ahead! As we enter the final month of the first quarter, we will begin to form a clearer picture of the year and the performance of key market indicators.
One thing is certain: this month will not be dull for investors. Expect significant fluctuations with a predominantly short-term character. Geopolitical events (such as the Ukraine conflict and Gaza) and the imposition of tariffs are among the key factors influencing many markets. Additionally, central bank meetings throughout March will take center stage, shaping market movements. So far, the European Central Bank (ECB) is the only institution expected to reduce interest rates, while the market anticipates that the Federal Reserve (Fed) will keep rates unchanged.
The direction will depend on the macroeconomic data already released and those scheduled for release before the Fed's two-day meeting ends on March 19. According to our models, we expect rate cuts to begin in the first half of the year, and we believe that Jerome Powell will not sustain his conflict with President Trump’s calls for lower rates, particularly as the U.S. needs to refinance $7 trillion in debt maturing this year, along with an additional $2 trillion needed for the anticipated fiscal deficit. Although there are discussions about extending bond maturities to maintain refinancing interest, the Fed may have to keep rates steady or slightly lower for a while, before embarking on more aggressive rate cuts.
Given all these developments, along with the significant date of March 21—when derivatives and options on indices and stocks expire, known as the "witching day" we conclude that this month is critical for the performance of market indices and overall returns. When combined with the performance data from the beginning of the year, the real data will create substantial interest and important opportunities for returns throughout the year.
Looking at year-to-date returns:
European indices continue to show solid performance, with gains ranging from 10%-13% by the end of February. In contrast, U.S. markets have seen more mixed results. The Dow Jones and S&P 500 have posted modest gains of around 1%, while the Nasdaq and Russell indices have declined by 3%-4%, mirroring the losses in the Nikkei.
Oil prices have also declined since the start of the year. As noted in our previous article, we predicted a drop to around $67.50 for WTI, which is where it stands as we write this, and Brent is currently at $70, below the $72 level we previously forecasted. We believe oil prices will remain in this range or slightly lower for several sessions, offering only short-term positioning and profit-taking opportunities.
Another key forecast we have is for the Baltic Dry Index. We expect it to move toward 1260 points (closing at 1276 on 03/03), with the next target set at 1650 points. We have previously pointed out that levels around 800 points presented an opportunity for upward movement.
Regarding the €/$ exchange rate, we still believe that a move towards the 1.0600 level will present a buying opportunity for the U.S. dollar, potentially triggered by an interest rate cut from the ECB on Thursday.
Finally, it is important to emphasize that we should not judge markets solely based on index movements, but by examining sectoral performance and individual stock behavior. Many opportunities are often hidden in the movements of specific sectors, which may not be visible during a down day for the overall indices but become crucial when the broader market starts to move upwards. This may sound complex, but it is how large capital and major players position themselves.
The month will experience sharp fluctuations, particularly until the 21st. However, based on our systems, something significant and lasting is preparing to take off.
In our previous article, we discussed Greek shipping companies listed on the U.S. markets. Based on our systems, they are beginning to move toward attractive levels, though they have not yet reached our desired target prices. Nevertheless, they are not far off. We will refrain from specifying exact target prices here, but anyone interested in these levels can reach out to us either through Maritime Economies magazine or via the contact form on our website www.gekodesk.gr.
by Kotsiakis George
