First Quarter | 2019
What a difference a quarter can make! Not a typical statement from us at Mawer given we are long-term investors, but after the steep decline in global equities at the end of 4Q18, stock markets, led by the U.S. and Canada, snapped back in the first three months of 2019.
Fourth Quarter | 2018
After years of generally rising equity markets, 2018 saw broad equity declines with pronounced volatility in the final quarter where markets swung up and down by multiple percentage points on many days. Global equities as measured by the MSCI All-Country World Index dropped 7.8% during the quarter. The main catalysts of the weakness appear to be worries about rising interest rates, trade actions, slowing global economic growth, and the flattening of the U.S. treasury yield curve.
Third Quarter | 2018
Global economic signals presented a mixed picture in the third quarter of 2018. The U.S. economy forged ahead posting 4.2% real GDP growth, China implemented policies to broaden domestic demand, the U.S. and China announced retaliatory tariffs, NAFTA trade talks dragged out (only to be resolved on the last day of the quarter), and the U.K. continued to prepare for Brexit.
Second Quarter | 2018
The year began with a more volatile backdrop as rising interest rates and the price investors are willing to pay for investments turned into a bit of a tug-o-war. The second quarter of 2018 can be characterized as mostly positive for investment returns—perhaps surprisingly so, given the worries about escalating trade disputes and rising interest rates. A contributing factor was strong global economic growth.
First Quarter | 2018
Although 2018 began with a continuation of the strong equity performance investors saw in 2017, by late January the threat of rising interest rates and inflation expectations led to a deterioration in investor psychology. Equity markets around the world declined markedly, and while this appeared short-lived at first, the emergence of protectionist rhetoric and volatility in the technology sector late in the quarter led equity markets lower again in March.
Fourth Quarter | 2017
Markets continued their year-long upward trajectory in the final quarter of 2017. Synchronized growth in advanced economies, strong corporate earnings, and positive sentiment contributed to a quarter of stellar performance in most global asset markets.
Third Quarter | 2017
Monetary policy “normalization” returned as a major theme this quarter. As indicators for the global economy continued to show signs of strength, central bankers in many major economies—e.g., U.S., Canada, China and Europe—have signaled that the end of a very loose monetary era is nigh. Markets may be facing an important inflection point.
Second Quarter | 2017
Investment headlines in the second quarter of 2017 were once again full of politics, with developments in Europe, the U.K. and the U.S. dominating discussion. One might say the quarter was not so good for the populists: Trump found himself embroiled in scandal, British Prime Minister Theresa May managed to lose her conservative party’s majority by calling a snap election, and Marine Le Pen was soundly defeated in France’s Presidential contest by Emmanuel Macron. Political uncertainty notwithstanding, it was a solid quarter overall for investment performance: most major equity and bond markets posted positive returns.
First Quarter | 2017
The themes that emerged in the fourth quarter of 2016 carried through to the first quarter of 2017. Confidence in the outlook for global economic growth continued to take hold, moving equity markets broadly higher. European and Emerging Markets were the leaders while the U.S. market achieved new all-time highs. Bond yields rose for most of the last three months, with 10-year Treasuries rising to as much as 2.6%, before falling largely in line with the levels achieved by the end of 2016.
Fourth Quarter | 2016
After an extended period of highly correlated markets, (i.e., equities and bonds delivering positive returns in tandem) the fourth quarter was characterized by divergences. Bond markets moved in reaction to growing expectations that changes in the U.S. will lead to higher economic growth accompanied by rising inflation. Generally speaking, equity markets gained in local terms—although Canadian dollar strength negatively impacted most returns outside of North America.