Investors had lots to cheer by the end of Q1 as stocks rallied, bond yields fell, central bank hiking slowed and inflation cooled again. It’s a promising start to 2023 but there were a few shocks along the way.
Investors experienced a turbulent ride in 2022. Inflation, central bank rate hikes, oil prices, supply chain disruptions and the Russia-Ukraine conflict cast a long shadow on markets, causing extreme volatility and dominating financial headlines 24/7.
Despite a bright start to Q3, U.S., Canadian and global equities gradually lost momentum as the Fed reiterated it would continue its monetary tightening path. In bond markets, U.S. and Canadian yields rose on the outlook for interest rates, inflation and the pound falling to a record low after the U.K. government announced huge tax cuts funded by increased borrowing which were subsequently rejected by the market and reversed.
It was an eventful quarter. Lingering inflation, tightening central bank policy, high oil prices and geopolitical tensions were top of mind for investors. U.S., Canadian and global equities swung back and forth on market volatility, one moment bullishly coping and the next turning bearish, before ending Q2 in the doldrums.
We wanted to take a moment to share a special market and economic summary by our in-house CFA Charterholders, Matthew Jenkinson and Cy Korun, addressing the current market volatility and economic uncertainty.
The start to 2022 has been a volatile one. High inflation, rising interest rates and commodity prices, and geopolitical tensions with war are weighing on global economies, supply chains and consumers.
U.S, Canadian and global equity markets started Q3 where Q2 ended, confidently charting a course forward. By the end of August, equities had notched a seventh straight month of gains, with the S&P 500 Index finishing near its all-time high and the TSX Composite Index on its longest winning streak in four years.
The global economy continued to recover in the second quarter helped by the rollout of COVID-19 vaccines, U.S. fiscal stimulus programs and supportive monetary policies from the Fed and other major central banks.
Markets in the first quarter of 2021 have been marked by ongoing volatility as the world recovers from the negative effect of the first waves of the COVID-19 pandemic.
Despite a resurgence of COVID-19 cases and renewed lockdowns in many regions, markets trended upward during the fourth quarter of 2020, boosted by growing clarity around the outcome of the U.S. presidential election and significant COVID-19 vaccine progress.
Recovering from the pandemic-related downdraft of the first quarter, financial markets enjoyed a period of relative calm and optimism through of the summer of 2020. Equity prices in many markets continued to improve, with some sectors moving sharply higher as lockdown restrictions eased and economic activity gradually resumed...
While the first quarter of 2020 was dominated by anxiety surrounding the initial outbreak of COVID-19 and the ensuing lockdowns and capital market declines, the second quarter demonstrated a remarkable bounce back in those markets – even with a resurgence of the virus in the U.S. and renewed lockdown measures.
Cy Korun discusses the current market and economic environment as we see it and provides some sound food for thought during these volatile times.