Unlike other asset classes, most equity markets continue to trade below the levels of September 2018. That makes sense, once you look at the reasons behind turns in sentiment.
After a turbulent fourth quarter in 2018, things got a lot calmer for financial markets so far in 2019. In our "Chart of the Week", we are looking at various asset classes and to what extent they’ve made up for the losses in late 2018.
Several interesting observations can be made. While many stock indices have risen by more than 10 percent this year, most markets continue to trade below the levels from September 2018. Comparing major equity indices, emerging markets were the only ones to fully recover the losses of the fourth quarter 2018. Corporate-credit-indices’ performance exceeds the previous losses, too. Commodities, while up year-to-date, on average remain below their September prices.
Safe-haven investments, like sovereign bonds, were the top performers: after their strong run in the fourth quarter 2018, they continued to deliver positive performance so far this year, producing positive returns in excess of pure coupon income. Gold was performing best: the yellow metal’s price rose strongly in late 2018, and kept going up this year.
These positive results are another indication that the U-turn by monetary policy was quite helpful in turning around market sentiment. Going forward, it might prove difficult for central bankers to continue providing such support for financial markets. While markets might cheer to announcements of easy money, they usually do not appreciate the justifications for it, as they demonstrated after the recent Federal Reserve (Fed) and European Central Bank (ECB) meetings.
Sources: Bloomberg Finance L.P., DWS Investment GmbH as of 3/28/19
* ICE BofA Merrill Lynch Euro Non-Financial High Yield Constrained Index
** ICE BofA Merrill Lynch US High Yield Index
Other indices: Dax, Euro Stoxx 50, MSCI Emerging Markets, MSCI Japan, S&P 500
Performance over the past 5 years (12-month periods)
|
03/14 - 03/15 |
03/15 - 03/16 |
03/16 - 03/17 |
03/17 - 03/18 |
03/18 - 03/19 |
||
|---|---|---|---|---|---|---|
|
Commodities |
-22.8% |
-26.6% |
15.5% |
0.5% |
-7.7% |
|
|
DAX |
25.2% |
-16.7% |
23.6% |
-1.8% |
-5.5% |
|
|
Euro Stoxx 50 |
16.9% |
-18.7% |
16.5% |
-4.0% |
-1.2% |
|
|
Europe high yield |
6.1% |
-0.6% |
9.5% |
3.8% |
1.9% |
|
|
MSCI Emerging Markets |
-2.0% |
-14.1% |
14.5% |
22.2% |
-10.8% |
|
|
MSCI Japan |
28.4% |
-14.5% |
11.4% |
12.1% |
-5.0% |
|
|
S&P 500 |
10.4% |
-0.4% |
14.7% |
11.8% |
6.2% |
|
|
U.S. high yield |
2.0% |
-3.7% |
16.4% |
3.8% |
5.7% |
Sources: Bloomberg Finance L.P., DWS Investment GmbH as of 3/4/19
