IN FOCUS6-8 min read

Schroders Equity Lens: your go-to guide to global equity markets

Our Q4 analysis highlights the charts and data that matter to global equity investors.

17/10/2021
camera-lens-sun

Authors

Sean Markowicz, CFA
Strategist, Strategic Research Group

Explore our featured funds and stategies designed to take advantage of current market opportunities. Find out more. 

What’s been driving stock prices? Are they currently expensive or cheap? And which regions and sectors are poised to do well amid rising inflation and bond yields?  

These are some of the questions we aim to answer in our quarterly publication – the Schroders Equity Lens, a compilation of key trends in global equities illustrated through thought-provoking charts. 

Click here to download your Q4 copy.  

Summary

After several strong quarters of gains, global equities fell -1.0% in Q3.

The spread of the delta variant, surging inflation and signs that central banks were getting ready to withdraw policy support weighed on investor sentiment.

Regulatory actions in China and concerns about spillovers from its property market did not help.

The best performing region was Japan (+5.3%), where earnings momentum strengthened and business conditions improved amid a change in political leadership.

The worst performing region was emerging markets (-8.0%), which saw a steep sell-off in Chinese stocks (-18.0%) and continued supply-chain disruptions.

However, many energy exporters posted strong gains amid rising fuel prices, including Russia (+9.5%), Kuwait (+9.1%) and Saudi Arabia (+8.2%).

Despite a strong corporate earnings season, US equities only notched a small positive return (+0.4%), as bond yields rose and the Federal Reserve signalled it would start tapering bond purchases.

As we have written in the past, sharp upward moves in bond yields tend to weigh more on equity returns than more gradual moves that are supported by improving growth prospects. 

The sectors that tend to benefit from rising bond yields include banks and energy. Utilities and telecom services tend to underperform.

When rates are rising as a result of higher real yields, value stocks tend to beat growth stocks, while US and Japanese equities tend to outperform the rest of the world.
 
Q3 sector performance was relatively polarised. Soaring commodity prices and a broad inflationary backdrop meant that global energy stocks were the top performer (+3.1%). Financials also performed well (+2.0%).

However, consumer discretionary stocks were the weakest (-5.0%), weighed down by peaking growth expectations, global inflationary concerns and policy uncertainty in China.

Earnings revisions momentum appears to have peaked in all major equity regions, except Japan where it has started to accelerate.

Read the full report

Schroders Equity Lens - Q4 202145 pages | 1,147 kb

Download

Authors

Sean Markowicz, CFA
Strategist, Strategic Research Group

Topics

In Focus
Equities
Sean Markowicz
Alpha Equity
Data
Market views
Global
Follow us

Please ensure you read our legal important information before visiting the rest of our website.

Issued by Schroder Investment Management (Singapore) Ltd, 138 Market Street, #23-01, CapitaGreen, Singapore 048946.

Schroder Investment Management (Singapore) Ltd is regulated by the Monetary Authority of Singapore. Reg. no. 199201080H

Important notice: Schroders does not make unsolicited requests through emails, calls, messages, WhatsApp, WeChat, Facebook, Instagram applications. Any contact other than via Schroders’ official channels for personal or financial information is likely to be false and fraudulent. Please stay vigilant and refer to our Fraud Alert Notice for further details. If you have doubts about the person, platforms, websites or institutions that claim to be associated with Schroders, please contact us via +65 6800 7000 and inform the local police.