Global stocks declined for a third consecutive quarter, pressured by high inflation, rising interest rates and recession fears in many countries. Following a robust summer rally, stocks resumed a sharp selloff in mid-August as inflation soared and central banks around the world reconfirmed their commitment to tighten monetary policy.
All sectors of the MSCI All Country World Index lost ground, led by a steep drop among communication services stocks. The rate-sensitive real estate and utilities sectors also fell sharply. Energy and consumer discretionary stocks posted relatively better returns, though both sectors slipped during the quarter. A strong U.S. dollar put added pressure on international and emerging markets.
Bond markets tumbled as the U.S. Federal Reserve and many other central banks moved aggressively to hike interest rates amid mounting inflationary pressures. In some major economies, consumer prices rose by 8% to 10% annualized, surpassing 40-year highs. The European Central Bank raised rates for the first time in more than a decade, ending an era of negative rates in the eurozone.
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