Equity markets: falling equities
In January, U.S. markets fell by 5.6% in euro terms. Other regions of the world had to give up less ground than U.S. equities in January: European stock markets yielded 3.6% and emerging market equities went down 1.3%. Sector-wise, the energy sector in the United States was the only one to remain in the green since the beginning of the year. In Europe, financials, communication services and real estate also did well. Technology stocks, on the other hand, underperformed the indices over the past month. The NASDAQ took a hit of 7.6% in euro terms. In January, the S&P 500 index recorded its strongest monthly decline since March 2020. The performance of so-called value stocks was clearly higher than that of growth stocks. The major US tech companies all had to cave in, including Amazon (-10.3%), Microsoft (-7.5%) and Meta Platform (-6.9%). Tesla (-11.4%) and Netflix (-29.1%) also suffered steep declines.
The change in direction in U.S. monetary policy and the speed and magnitude of the subsequent rise in bond yields, fueled the already present concerns about the valuation of some of the market's riskiest segments. While monetary policy attracted all the attention, the unwinding of supportive fiscal policy was perceived to be a problem. The slowdown in high-frequency indicators, due in part to Omikron, also weighed on sentiment. Finally, the high level of geopolitical tensions had a negative impact on investor sentiment over the past month.
The release of corporate results could not bring relief in January, even though the profits of the S&P500 index seemed to be on track for a fourth consecutive quarter; growth reached over 20% in Q4 and companies from a wide range of sectors were still able to pull up on strong demand. Continued supply chain pressure and component prices remained front page news. Wage pressures also received increased attention and a number of companies, including some large banks, came under scrutiny for publishing higher expenses. The weaker momentum of earnings revisions was a negative factor for stock markets.
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MSCI EMU NR | -3.5% | -2.1% | -3.5% | 19.5% |
MSCI EUROPE NR | -3.2% | -0.4% | -3.2% | 22.0% |
MSCI USA NR | -4.3% | 0.1% | -4.3% | 30.5% |
MSCI JAPAN NR | -3.7% | -2.6% | -3.7% | 5.7% |
MSCI EM. MARKETS NR | -0.5% | -1.0% | -0.5% | 0.5% |
MSCI AC WORLD NR | -3.5% | -0.4% | -3.5% | 22.7% |