Key points


  • Global equities have swiftly recovered most of their 2018 losses, with the MSCI All Country World Index up 8% year to date.
  • Of those S&P 500 companies that have reported earnings, 72% have beat earnings expectations posting aggregate growth of 14%. The sharp repricing of 2019 Fed rate hike expectations fuelled a risk rally.
  • The asset class still appears attractively valued on an absolute basis and also relative to sovereign bond and credit markets by historical standards.

Global equities swiftly recover most of their 2018 losses

Year to date, equities have swiftly recovered most of their 2018 losses with the MSCI All Country World Index up 7.6%. Among major markets, the United States tops the lists, up 8.4% since the beginning of the year, followed by emerging markets (+7%). On the sector front, cyclical plays outperformed with energy (+9.2%) and industrials (+9.2%) outperforming while the technology (+9.8%) space also recovered. In line with the risk-on rally, global small and mid caps (+9.3%) posted strong returns. Volatility has continued to normalise after the massive surge in December with the CBOE Volatility Index (VIX) now down to 16.6 points compared to a daily average of 21 and a peak of 36 in the final month of 2018.



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