As at the 31 January 2022
Observations from January.....
Despite global bond markets doing their best to flag the dawn of a new cycle of monetary and fiscal tightening, global stock markets set fresh highs in early January.
The US Federal Reserve though, rained on that parade with their clearest hint yet that “with inflation well above 2% and a strong labour market” it would soon be appropriate to raise the target range for the federal funds rate and to likely halt asset purchases in March.
Markets moved swiftly to align valuations with higher interest rate assumptions, broad based market indexes saw a peak to trough pull back of 10% and growth stocks withstood a withering assault before restoring some order into the end of the month.
Posting its fourth-worst start to the year since 1960, Australian stocks underperformed most global peers, ending the month lower by some 6%.
It wasn’t all bad though, energy stocks posted a gain of 8% for the month with surging energy prices flowing through to higher earnings. A steadily recovering iron ore price helped BHP and RIO both post gains of over 11% for the month.
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