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.
- 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 article is intended to be for information purposes only and it 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. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested. Issued by Schroder Investment Management Limited, 31 Gresham Street, London EC2V 7QA, which is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped or monitored.