In focus

Schroders Equity Lens: your go-to lens on 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 next?  

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. 

Summary

Global equities fell 5.3% in Q122, their largest quarterly loss since 2020.

In local currency terms, the best performing market was the UK (+4.8%), aided by rising energy and material prices.

The worst performer was EM (-6.0%), driven by a deteriorating growth outlook in China and the war between Russia and Ukraine.

Q1 sector leadership was mixed between cyclicals and defensives. Energy (+21.5%) was the star performer as record oil and gas prices turbo-charged the sector.

Commodity-related sectors such as materials (+2.9%) and utilities (+1.4%) also outperformed.

In contrast, growth-orientated sectors such as IT (-10.2%) underperformed as higher bond yields weighed down on valuations.

Historically, a period of slowing economic growth and high inflation has favoured investing in sectors such as utilities, consumer staples, real estate and energy.

Based on current sector weights only, the UK may offer the best protection in a stagflation scenario.

For example, around 50% of the MSCI UK Index is made up of energy and defensive stocks, while the equivalent figure is 30% for the rest of the world.

Global 3-month earnings revisions decelerated sharply in Q122 and are approaching the zero threshold (i.e. upgrades = downgrades). Net revisions remain negative in EM, but are low and positive in all other regions.

Download the Q2 Schroders Equity Lens.

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.