A Complex Backdrop for Global Equities

Slow but steady progress in the fight against inflation, combined with inconclusive economic data from labor market strength to GDP weakness, created a complex backdrop for investors in the second quarter. Despite the uncertain outlook, markets ticked upwards, helped by the resolution of the U.S. debt ceiling. Global equities ended the quarter in positive territory.

The United States was a clear outperformer, with the S&P 500® Index reaching nearly double digits for the quarter. Inflation continued to trend downwards as the May Core Consumer Price Index (CPI) report hit a two-year low of 4%. Ongoing labor market tightness boosted wages, adding to concerns about consumer demand and further price increases. The Federal Reserve (Fed) paused interest rate hikes in June after ten successive rises but signaled additional rate increases may be needed before the end of the year to tame inflation.

Vontobel Market Review & Outlook

Index definitions:
MSCI All Country (AC) World measures equity performance of developed and emerging markets. MSCI EAFE® measures developed foreign market equity performance, excluding the U.S. and Canada. MSCI Europe measures equity market performance of Europe’s developed markets. MSCI Japan measures performance of the Japanese market’s large and mid-cap segments. MSCI AC Asia Pacific ex Japan measures equity market performance of Asia’s developed and emerging markets (excluding Japan), Australia and New Zealand. MSCI Emerging Markets measures equity market performance in global emerging markets. MSCI AC World ex US measures equity performance of developed and emerging markets, excluding the U.S. S&P 500® measures performance of 500 of the largest U.S. companies. All indexes are free float-adjusted market cap-weighted and calculated on a total return basis with dividends reinvested.

The commentary is the opinion of Vontobel Asset Management. This material has been prepared using sources of information generally believed to be reliable; however, its accuracy is not guaranteed. Opinions represented are subject to change and should not be considered investment advice or an offer of securities.

Past performance is no guarantee of future results.

All investments carry a certain degree of risk, including possible loss of principal.