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Good Things Come to Those Who Are Patient
By Advisor Perspectives
In the World
Markets bounced back from December’s steep sell-off, embodying the old adage that good things come to those who wait. A dovish pivot by the Federal Reserve – with a focus on “patience” in Fed officials’ comments as well as the official statement in January – combined with optimism over U.S-China trade negotiations bolstered investor sentiment and contributed to impressive gains in equities. The U.S. led the rally in developed markets as the S&P 500 index rose 8.0%, marking its best January in over 30 years; MSCI Emerging Markets Index also surged 8.8%. Still, U.S. stocks remained nearly 8% below their 2018 peak in September. The robust “risk-on” sentiment reverberated across other asset classes: Credit spreads tightened, with lower-credit-quality corporate debt outperforming higher-quality; emerging market currencies appreciated against the U.S. dollar; and U.S. inflation expectations rose. Brent crude oil prices also rallied over the month, recovering to $62 per barrel on the back of OPEC production cuts and new U.S. sanctions on Venezuela’s oil industry. However, even as sentiment improved, bond yields fell across many developed economies as corporate earnings were mixed and evidence grew of a slowdown in global economies. The dovish tilt from the Fed and other central banks also contributed to the move lower in rates.
Read more at Advisor Perspectives.
Photo: Jim Makos