Navigating rocky markets as 2022 starts with a whimper | February 2022

Markets have had a volatile start to the year, with particular weakness from the technology sector. The immediate catalyst appears to have been the hawkish minutes from the most recent FOMC meeting, which raised expectations of faster and steeper interest rate rises. Global equities have fallen around 4%.1

US equities have led the decline, with a significant sell-off in the 6 US mega caps, including Apple, Microsoft, Alphabet, Amazon, Tesla and Meta Platforms. Valuations had become stretched and the sector had looked ripe for a re-rating. Value markets, such as the UK, have fared better.

While inflation, Covid variants and geopolitical tensions continue to weigh on investor sentiment, policy easing in China should improve global growth prospects and mitigate the impact of US rate rises. Inflation remains the key variable for the coming months.

Source

1 Refinitiv, Smith and Williamson

SUBSCRIBE

Stay up to date with our latest insights, subscribe to our mailing list here and choose the topics you’re interested in: https://bit.ly/2SKomDq

GET IN TOUCH:

Have any feedback? We're listening, email us at: [email protected]

FOLLOW US:

Twitter - @SmithWilliamson

LinkedIn - @Smith&Williamson

This episode was recorded on 31/01/2021

Capital at risk. Please remember the value of investments and the income from them can fall as well as rise and investors may not receive back the original amount invested. Past performance is not a guide to future performance.

This S&W The Pulse podcast is of a general nature and is not a substitute for professional advice. No responsibility can be accepted for the consequences of any action taken or refrained from as a result of what is said. The views expressed are not necessarily those of the presenter or of Smith & Williamson or any of its affiliates. No reproduction of this podcast may be made in whole or in part for professional or recreational purposes. No action should be taken based on this podcast and we accept no liability if we change your views on any of the subjects mentioned.

Smith & Williamson Investment Management LLP

Authorised and regulated by the Financial Conduct Authority. Registered No 580531