In focus

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


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 2021

45 pages | 1,147 kb

download

Important Information:
This material has been issued by Schroder Investment Management Australia Limited (ABN 22 000 443 274, AFSL 226473) (Schroders) for information purposes only. It is intended solely for professional investors and financial advisers and is not suitable for distribution to retail clients. The views and opinions contained herein are those of the authors as at the date of publication and are subject to change due to market and other conditions. Such views and opinions may not necessarily represent those expressed or reflected in other Schroders communications, strategies or funds. The information contained is general information only and does not take into account your objectives, financial situation or needs. Schroders does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this material. Except insofar as liability under any statute cannot be excluded, Schroders and its directors, employees, consultants or any company in the Schroders Group do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this material or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this material or any other person. This material is not intended to provide, and should not be relied on for, accounting, legal or tax advice. Any references to securities, sectors, regions and/or countries are for illustrative purposes only. You should note that past performance is not a reliable indicator of future performance. Schroders may record and monitor telephone calls for security, training and compliance purposes.

Contact Schroders

Schroders is a world-class asset manager operating from 37 locations across Europe, the Americas, Asia, the Middle East and Africa.




Worldwide locations

For any further questions, please contact us.

Contact us

Our sales team is available to discuss with you any investment options and opportunities you might be interested in.

Your contacts