Quarterly markets review - Q1 2016
An overview of markets in Q1 2016, when emerging market equities outperformed their developed counterparts, supported by hopes of political change in Brazil.
6 April 2016
- Global equities followed a V-shaped trajectory over the quarter, with stocks falling sharply to mid-February and rebounding thereafter to end virtually flat in US dollar terms. The actions of central banks and a recovery in the oil price were important contributors to the market turnaround.
- US equities gained over the quarter. The market responded positively as forecasts for additional increases in US interest rates were deferred following dovish comments from Federal Reserve chair Janet Yellen.
- Eurozone equities had a turbulent quarter with banks under particular pressure. The European Central Bank announced fresh monetary policy easing in early March. In the UK, sterling fell as markets digested the possibility that the UK could leave the EU following the June referendum.
- Japanese equities declined amid unusual volatility. The Bank of Japan surprised investors with a move to a negative interest rate policy.
- Emerging market equities posted positive returns and outperformed developed market equities. An easing in US dollar strength supported emerging markets while Brazil was the strongest market amid heightened expectations for the political change.
- In bonds, both government and corporate indices were positive. The 10-year Treasury yield fell from 2.27% at the end of December to 1.77% at the end of March.
Important Information: The views and opinions contained herein are those of the author(s) on this page, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. It is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. To the extent that you are in North America, this content is issued by Schroder Investment Management North America Inc., an indirect wholly owned subsidiary of Schroders plc and SEC registered adviser providing asset management products and services to clients in the US and Canada. For all other users, this content is issued by Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA. Registered No. 1893220 England. Authorised and regulated by the Financial Conduct Authority.