“If you can keep your head when all about you are losing theirs…” (Rudyard Kipling). Although markets’ early movements might suggest otherwise, there was very little in the way of fresh news on the global economic front during a quarter in which volatility was once again a major feature. Equity indices recovered from one of the worst starts to a new year on record to end the period with mixed results, while core government bonds revisited the bottom of their historic ranges on the back of strong demand.
Having gained surprisingly little ground during the opening weeks’ “risk-off” episode, meanwhile, the Dollar went on to record its biggest quarterly decline for 5½ years. Elsewhere, in another unexpected twist, there were signs of a revival in commodities, after oil prices bottomed out at a 13-year low and gold went on a tear.
Equities
Despite ample evidence to the contrary, renewed concerns over global growth were yet again the trigger for the latest sell-off in equity markets. Fears of a looming recession in the US, the perennial Chinese economic hard landing, weakness in, or devaluation of, the Yuan/Renminbi, premature tightening by the Fed and the damaging impact of lower oil prices on the energy sector all combined to produce a potent cocktail of bearish sentiment. Though perhaps lacking its sheer speed, this sell-off was every bit as severe as the preceding correction in August, with the MSCI World (local currency) Index down 12.59% at its intra-quarter, mid-February, 28-month low… {download the PDF below to read the entire Quarterly Report}
MitonOptimal (International) Q1-2016 Quarterly Market Commentary
