MARKET COMMENTARY | October 2017
Stocks rose amid a brighter outlook for the global economy and better-than-expected corporate earnings. Several key market indexes reached record highs during the quarter, despite increasing tensions with North Korea and the start of a particularly destructive hurricane season. European stocks and emerging markets outpaced U.S. equities.
Economically sensitive stocks generally provided stronger returns than defensive sectors. Information technology, energy and materials stocks led markets higher. Financial stocks also advanced on expectations for rising global interest rates. The consumer staples sector fell, weighed down by a sharp decline in the shares of tobacco companies.
MARKET COMMENTARY | September 2017
Global stocks finished August roughly where they started as investor optimism over improving world economic growth was tempered by rising geopolitical risk. Developed markets in the U.S., Europe and Japan moved sideways as tensions rose over international disputes with Russia and North Korea. In contrast, emerging markets stocks rose on stronger metals prices and a weaker dollar.
Information technology and utilities stocks enjoyed the best gains, supported by strong corporate earnings growth. Energy stocks declined the most, weighed down by falling oil prices amid over-supply concerns. Financial stocks also fell as many investors appeared to take profits from what had been the highest returning sector in developed markets since the November U.S. elections.
MARKET COMMENTARY | August 2017
Global stocks posted modest gains amid healthy corporate earnings reports and an improving outlook for global economic growth. U.S. stocks hit a series of new record highs and European equities enjoyed significant inflows. A weakening dollar and rising commodities prices supported a strong rally in emerging markets.
Telecommunication services and basic materials stocks led markets higher, supported by signs of a broad-based recovery in the global economy. Information technology stocks also rallied on solid earnings growth from tech giants Apple, Facebook and Microsoft. Health care and consumer staples stocks lagged the overall market.
MARKET COMMENTARY | July 2017
Global stocks advanced amid accelerating economic growth in the U.S. and Europe, coupled with signs of diminishing political risk in the euro zone. Investor sentiment improved markedly as political newcomer Emmanuel Macron defeated Marine Le Pen in the French presidential election, largely erasing concerns that France may attempt to leave the European Union.
Health care stocks experienced strong returns as the U.S. Senate proposed a new industry-friendly plan to reform the nation’s health care system. Emerging markets also rallied amid improving global economic data and a weaker dollar. Energy stocks declined sharply, hurt by persistent oversupply concerns that continued to drive oil prices lower.
MARKET COMMENTARY | June 2017
Global stocks rose amid signs of improving economic growth and healthy corporate earnings. Several key indexes hit record highs as pro-European Union candidate Emmanuel Macron won the French presidential election. However, persistent questions about political stability in the U.S., Europe and elsewhere tempered those gains.
Information technology stocks led markets higher, supported by surging share prices for U.S. tech giants Apple and Google parent, Alphabet. The utilities sector rallied amid rising demand for dividend-paying stocks. Emerging markets stocks also advanced, despite a brewing political scandal that sent Brazilian markets tumbling.
MARKET COMMENTARY | May 2017
Global stocks rose modestly, supported by improving world economic growth and diminishing political risk. Investors cheered better economic data in the U.S., while breathing a sigh of relief over the results of the first round of France’s presidential election. French stocks rallied on poll results showing that a centrist, pro-European candidate is likely to win the May 7 runoff election.
Cyclical stocks generally outpaced defensive areas of the market, led by gains in the industrials and consumer discretionary sectors. Information technology stocks also moved higher amid strong earnings reports from bellwether tech companies. Energy stocks declined, following oil prices lower for the month.
MARKET COMMENTARY | April 2017
Global stocks rallied amid strong corporate earnings growth and improving economic data in the United States, Europe and Japan. Several key market indexes hit a series of new highs, fueled by expectations that newly elected U.S. President Donald Trump would deliver business-friendly policies, including tax cuts and regulatory reductions.
Economically sensitive stocks led markets higher, highlighted by a 12% gain in the information technology sector. Health care stocks rose sharply as U.S. lawmakers failed to repeal the Affordable Care Act, reducing uncertainty surrounding the legislative overhaul. Emerging markets stocks also rallied on brighter prospects for China’s economy.
MARKET COMMENTARY | February 2017
Global stocks rose modestly, supported by strong corporate earnings and signs of improving economic growth in the U.S., Europe and Japan. Gains were tempered by political uncertainty around the world, including investor worries about upcoming elections in Germany and France. Emerging markets enjoyed the best returns, boosted in part by higher prices for raw materials.
Economically sensitive sectors generally outpaced defensive stocks, underscored by significant gains in the information technology and materials sectors. Consumer discretionary stocks also advanced amid healthy growth in inflation and consumer spending. Energy stocks declined as oil prices slipped on reports of a substantial rise in U.S. crude oil inventories.
MARKET COMMENTARY | January 2017
In a year marked by volatility and political upheaval, global stocks rallied on signs of improving U.S. economic growth and aggressive central bank stimulus measures around the world. U.S. stocks led developed markets higher, particularly late in the year as investors cheered Donald Trump’s unexpected victory over Hillary Clinton in the U.S. presidential election. Emerging markets also enjoyed strong returns, supported by rising commodity prices and political reform efforts.
MARKET COMMENTARY | January 2017
Global stocks ended the year on a high note, boosted by investor enthusiasm for U.S. political change and expectations for an improving world economy. U.S. stocks drove markets higher even as a strong dollar threatened to weigh on corporate earnings. Financial stocks soared as the Federal Reserve raised interest rates for just the second time in a decade. High-grade bonds declined and the dollar rallied against the euro, the yen and most other currencies.
MARKET COMMENTARY | December 2016
Global stocks rose amid market optimism for Donald Trump’s ascendancy to the U.S. presidency and signs of accelerating U.S. economic growth. Several key indexes hit record highs on expectations of market-friendly policies under the new administration. Financial stocks rallied as global interest rates moved higher. Bonds fell sharply and the dollar advanced against the euro, the yen and most other currencies.
MARKET COMMENTARY | October 2016
Global stocks declined modestly as signs of improvement in the U.S. economy raised investor concerns about higher interest rates. Health care stocks fell sharply amid ongoing drug pricing pressures and disappointing earnings reports, while the financial sector rallied on the outlook for rising rates. High-grade bonds lost ground and the U.S. dollar advanced against the euro, the yen and most other currencies.
MARKET COMMENTARY | September 2016
Stocks rebounded amid signs of stabilization in the global economy, strong earnings at bellwether companies and ongoing central bank stimulus measures. A “risk on” rally characterized the July-to-September period, following a highly volatile second quarter. Technology and materials stocks led markets higher, while the utilities and telecommunication services sectors declined. High-grade bonds advanced and the U.S. dollar fell against the euro and the yen.
MARKET COMMENTARY | August 2016
Stocks finished the month essentially flat as signs of an improving global economy were offset by investor concerns about higher U.S. interest rates. Information technology and financial stocks enjoyed the biggest gains while the utilities and health care sectors lost ground. High-quality bonds also declined as the Federal Reserve hinted at a rate hike this year. The dollar rose modestly against the euro, the yen and most other currencies.
MARKET COMMENTARY | August 2016
Global stocks rebounded from post-Brexit blues, regaining most of the losses suffered after British voters approved a referendum in June to leave the European Union. Central bank commitments to continue with easy monetary policy and economic stimulus measures helped to support stock prices. Emerging markets stocks rallied. Investment-grade bonds rose modestly. And the dollar was essentially flat against other major currencies.
Capital Group portfolio manager Mark Brett and economist Jens Søndergaard, both based in London, discuss possible implications of the Brexit vote for the U.K., the European Union and investors.
MARKET COMMENTARY | July 2016
Global stocks rose modestly in a volatile quarter marked by heightened concerns about threats to worldwide economic growth. Stocks initially dropped sharply after British voters on June 23 approved a ballot measure to leave the European Union, but a strong bounce-back rally erased most of the losses. Rising oil prices fueled gains in the energy sector while consumer discretionary stocks declined. High-grade bonds, the U.S. dollar and gold rallied.
MARKET COMMENTARY | June 2016
Stocks rose modestly as signs of improving global economic growth were tempered by investor concerns about a potential increase in U.S. interest rates. Developed markets generally outpaced emerging markets amid encouraging economic data in the U.S., Europe and Japan. Technology stocks rallied, while the energy and materials sectors lost ground. Bonds were essentially flat and the U.S. dollar rose against the euro, the yen and most other currencies.
MARKET COMMENTARY | May 2016
Global stocks posted modest gains, supported by rising oil prices and aggressive monetary stimulus measures. Energy and materials stocks rallied as signs of improving demand from China sent commodity prices sharply higher. Information technology stocks declined on disappointing first-quarter earnings at some bellwether companies. Bonds advanced and the U.S. dollar declined against the euro, the yen and most other currencies.
MARKET COMMENTARY | April 2016
Global equity returns were essentially flat as worries about slowing economic growth and falling oil prices sent markets plummeting in January and early February. Losses were tempered by a mid-quarter rally driven by improving U.S. economic data and new stimulus measures in China. Emerging markets regained some ground amid rebounding commodity prices. Bonds rose and the U.S. dollar declined against the euro, the yen and most other currencies.
MARKET COMMENTARY | March 2016
Global stocks produced mixed returns amid investor concerns about a slowing global economy, low oil prices and ongoing turmoil in the banking sector. U.S. shares were flat, while European and Japanese markets lost ground. Emerging markets showed signs of stabilization as some commodity prices moved higher, boosting the materials sector. Investment-grade bonds advanced on safe-haven buying, and the U.S. dollar declined against the euro and the yen.
MARKET COMMENTARY | February 2016
Global stocks tumbled into the new year amid worries about China’s slowing economy, rapidly falling oil prices and disappointing U.S. corporate earnings growth. Financial stocks experienced the sharpest declines, weighed down by concerns about risky loans in the energy sector and persistently low interest rates. Defensive stocks generally held up better. High-grade bonds rallied on safe-haven buying. The U.S. dollar rose against the euro, the yen and most other currencies.
Portfolio manager Rob Lovelace offers his perspective on recovery and growth in China, the U.S., Japan, Europe and the emerging markets.
MARKET COMMENTARY | January 2016
Global stocks delivered essentially flat returns as investor enthusiasm for the U.S. economic recovery was offset by concerns over a sharp slowdown in China. Aggressive central bank stimulus measures continued to support markets in Europe and Japan, while the U.S. gradually stepped back from accommodative policies. Emerging markets stocks generally lagged their developed-market counterparts by a wide margin. Mergers-and-acquisitions activity reached a record high, fueled by cheap financing.
Defensive stocks outpaced economically sensitive sectors. Health care and consumer staples stocks rallied, while energy and materials stocks plummeted amid falling prices for oil and other commodities. At the end of the year, the U.S. Federal Reserve raised interest rates for the first time in nearly a decade, setting the stage for tighter monetary policy in the years ahead. The U.S. dollar rose against the euro and most other currencies.
MARKET COMMENTARY | January 2016
Global stocks advanced amid surging M&A activity and a strong year-end rally in the technology sector. The Fed raised interest rates for the first time in nearly a decade, but cautioned that future rate increases would depend on the pace of U.S. economic growth. Conversely, central banks in Europe and Japan ramped up stimulus measures in an attempt to jumpstart lackluster economies. U.S. bonds fell and the dollar rose against the euro and the yen.
Fixed-income portfolio manager John Smet discusses the economic conditions underlying the Fed’s anticipated interest rate hike and offers a likely trajectory for future increases.
MARKET COMMENTARY | December 2015
Global stocks produced mixed returns amid investor worries about sluggish economic growth and expectations for higher U.S. interest rates. European equities advanced on the promise of new monetary stimulus measures, however, U.S. stocks were flat and emerging markets retreated. Bonds also declined as Federal Reserve leaders indicated that a rate hike is likely in December. The dollar rose sharply against the euro and the yen.
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