World Markets Review
Stocks and bonds stumble on rising rates: Q3 roundup

Global stocks declined, pressured by rising interest rates and slowing growth in some of the world’s largest economies. Even as global inflationary pressures subsided, indications that central banks may keep monetary policy tight weighed on stock and bond markets. Among major developed markets, Japan fared better than the U.S. and Europe.

In the MSCI All Country World Index, nearly all sectors fell. Rate-sensitive utilities and real estate stocks posted the biggest losses. Information technology stocks also lost ground following a strong first half of the year. Meanwhile, communication services stocks outpaced the overall market, and the energy sector rallied on higher oil prices.

Bond markets tumbled as the U.S. Federal Reserve and other central banks expressed a need to keep interest rates higher for longer in a bid to fight inflation. The Fed hit the pause button on its rate-hiking plans, but the European Central Bank continued to tighten in September, bringing rates to the highest level since the creation of the eurozone.

MSCI indexes are free-float-adjusted, market-capitalization weighted indexes. Developed market index results reflect dividends net of withholding taxes. Emerging market index results reflect dividends gross of withholding taxes through December 31, 2000, and dividends net of withholding taxes thereafter. Each index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes. MSCI All Country World Index (ACWI) is designed to measure results of more than 40 developed and emerging equity markets.

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