Trading in the first quarter was rather subdued. European stocks had their best quarter since 2009, up 7%, while Japan's Nikkei index rose nearly 20% in the quarter, for its best performance in 24 years. Emerging markets equity index was up 13.7% on the year.
The S&P500 rose 12%, for its best quarterly performance since Q3 2009, while the DJIA had its best Q1 since 1998. After the big run up, investors continue to wonder how sustainable the rally really is and where the fuel for more upside will come from. Markets are still betting the Fed will cart out QE3 in the months ahead. In Europe, German officials finally gave in to pressure and agreed to a stronger EFSF/ESM firewall fund, just in time for heightened tensions in Spain, where the government insisted that it did not need to consider a bailout for its banking system or request access to emergency funds. In energy markets, crude prices fell as western power continued consultations on releasing strategic reserves should the Iran situation worsen. WTI crude, which nearly hit $109, was down to $103 by the end of the month. Equity weakness in China helped lower prices for industrial metals somewhat, although copper prices still closed out Q1 up 11%.