Selectivity is Key, with a Focus on Quality
Central banks around the world continued to battle inflation with the persistent hiking of interest rates in the fourth quarter. However, November data, particularly in the U.S., E.U., and U.K., indicated a lower year-over-year inflation rate as energy prices fell from highs seen at the end of the second quarter.
Hopes of an end to the Federal Reserve’s tightening cycle boosted U.S. equities early in the quarter, with consumer price inflation softening to 7.1% in November. However, Fed Chair Jerome Powell warned that policymakers still had “more ground to cover” in the fight against inflation, dampening the mood in markets in December. Recession fears also intensified, and the U.S. dollar, which had been a pillar of strength the past few years, retreated 8.5%.
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.