Global equity markets rose in March to seal a strong first quarter for the year. While markets were roiled by the collapse of Silicon Valley Bank (SVB) and Signature Bank in the early part of March, the key theme during the quarter was one of peak inflation, a potential peak in Fed funds and, perhaps most importantly, the combination of weaker (but not recessionary) growth data and lower bond yields.

Global equity markets gave up ground in February as bond yields rose and markets reassessed the outlook for the Fed funds rate in light of strong payrolls and higher than expected inflation data. Australian Equities also fell as a strong start to the year lost steam.

Global equity markets gave up ground in December as the two-month rally in bond yields reversed course following a relatively hawkish December FOMC meeting and a surprise change to Japanese monetary policy. The sell-off in the month was not enough to offset what was a very strong December quarter performance from global equities, built on the belief that inflation had peaked and that the end of the monetary policy tightening cycle was in sight.

Global equity markets continued their ascent, rising 6.8 per cent in USD terms in November, following the 7.2 per cent jump in October. Despite another round of rate hikes by the US Fed (75 basis points to 4 per cent), the Bank of England (75 basis points to 3 per cent) and several other central banks in response to high inflation, markets instead focussed on the prospect of a de-escalation in the magnitude and pace of central bank policy tightening. While the Fed had been hinting at a possible “step down” in the pace of tightening given the cumulative moves to date and the lagged impact on the economy, better than expected US inflation data for October was the catalyst for a 5.5 per cent lift in the S&P500 on November 10.

The sell-down in equities began in August and continued into September. Global equity markets sold off sharply in September as bond yields ratcheted higher and the global growth outlook deteriorated. A surge in real yields was the main culprit, undermining all asset valuations.

After a significant rally from mid-June to mid-August, global equity markets lost ground over the second half of August as real bond yields moved higher and markets increased their bets that central banks were likely to maintain restrictive policy settings for longer than earlier thought.

Global equity markets rebounded in July as markets lowered their expectations for rate hikes and bond yields rallied. In a sense, poor economic news was good news for equities. With the aggressive Fed policy tightening raising the risk of recession and signs of an easing in commodity prices and supply chain issues, markets cut their expectations of “peak” Fed funds from around 3.5 percent to 3.25% while 10-year treasury yields rallied from just under 3 percent to 2.67 per cent.

Downward velocity in global markets tempered over the month of May as the war in Ukraine endures & inflation continues to escalate. Continuing lockdowns in China, notably in Shanghai, have had an ongoing impact on global supply chains, especially in the electronics sector.

Global markets descended further over the month of April as 'zero-COVID' lockdowns in China added to prolonged geopolitical risk pressures in Ukraine.

Quantitative tightening signalling from central banks has joined geopolitical uncertainty as core focuses for investors as heightened inflation continues to weigh on investor sentiment.

Global markets continued their downward trend over the month of March as the Ukrainian conflict continued with no certain end in sight.

Geopolitical uncertainty continues to be the core focus for investors as upward price pressure on energy and commodities hastens the pace of inflation across the globe.

A new Omicron sub variant emerged, causing a spike in infections across Europe and China, with China imposing targeted lockdowns in key provinces.

Global markets were battered over the month of February as geopolitical fears evolved into a reality in Ukraine. As expected, the conflict between Russia and Ukraine commanded the attention of investors, dampening confidence across the globe.

Subsequent to a positive end to 2021, global markets struggled in the first month of the year, challenged primarily by prospective interest rate hikes and geopolitical tensions in Ukraine.The key focus for investors worldwide continues to be the impact that inflation will have on markets. This has seemingly created favourable market conditions for value stocks over the last month, with value displaying monthly outperformance of over 7.4% relative to growth according to the respective MSCI ACWI Value and Growth indices in local currency terms. This is only the second time since the inception of the index that Value has outperformed growth in excess of 5%.

After a strong recovery in global markets over the prior month and stable performance for most of November, the month ended with volatility and the worst one-day decline of the year, as news of the spread of the new Omicron Covid-19 variant drove a sharp sell-off in global equities.

Global markets saw a recovery in performance during October from a volatile prior month, with developed markets returning 1.65%. More broadly, Asian and emerging markets continue to face pressure, with equities detracting there by 4.3% and 2.9% over the month.

September saw an evaporation to the gains made in global markets over the last three months, with developed and emerging markets receding by 3.1% and 2.8% in Australian Dollar terms, respectively.

Contraction in performance over September was primarily driven by fears of a global financial contagion stemming from the worlds most indebted company, the Chinese based Evergrande Group, after news that it was renegotiating coupon repayments on its US$300b of outstanding debt.

Global markets continued their climb into August, with emerging markets slightly outperforming developed markets as the region recovers from a sharp sell-off driven by Chinese equities in late July. Developed markets continue to be supported by economic stimulus and vaccination efforts, despite unabated trends in daily case rates across developed economies.

In Australian dollar terms, small cap global equities continue to be the best performer over the last twelve months, whilst their larger cap counterparts continue to outperform both small cap and emerging markets over the longer term.

Global Covid-19 cases continue to rise with numbers surpassing 197 million cases at the end of July, an increase of 14 million in the month. Delivery of vaccines continues to rise with 3.8 billion doses delivered globally as at the end of July, with the European Union saying that 200 million Europeans have been fully vaccinated. Vaccination remains key, as countries with high vaccination rates are showing lower hospitalisation and death rates even with increased infection rates.

Key economic indicators continue to improve generally, with several leading economies reporting above expected increases in inflation. Markets have also continued their positive momentum thus far in 2021.

Delivery of vaccines continues to rise globally; Germany now reports that over 40% of the population have received at least one dose. The EU has also recommended the relaxation of travel restrictions for those fully vaccinated with an EU-approved vaccine. Increased mobility is a rising theme globally as vaccination rates rise. Australia is one exception, the initial advantage the country had in the fight against COVID has eroded somewhat due to a lagging vaccination rollout.