The previous week ended in green for the major U.S. stock indices, despite a volatile start of 2022. The Nasdaq benefited from Apple’s impressive corporate earnings report, leading to a 3.1% gain on Friday. The Dow Jones and S&P500 ended the week on a slightly more positive note than earlier months, with a 1.3% and 0.8% increase.
Across the Atlantic in European markets, the losses continued. Stoxx Europe 600 fell by 1% and the German DAX closed with a loss of 1.5%. Both the AEX-index and the FTSE-100 fell by 1.3%. The Asia-Pacific markets varied in their gains and losses. The Nikkei 225 in Japan gained around 2.09%, Topix was up by 1.8% and Hong Kong’s Hang Seng fell by 1.1%. The Shanghai Composite fell by 0.97% and Shenzhen Component decreased by 0.53%.
Inflation also remains the talk of the town. On Wednesday, the Federal Reserve indicated that it will steadily raise interest rates in mid-March to combat the surge in wages and underlying price inflation spiral. There will be one last round of asset purchases, which would conclude the stimulus program by March. Following this announcement, speculation on what will happen after the March rate rise started. But it remains too soon to tell. On Friday, the U.S. government reported that the personal-consumption expenditures price index from December, increased by 5.8% overall. It is stated to be the largest increase since the early 1980s.
In light of the Fed’s announcement, heads turned to see how its European counterpart would respond. However, the European Central Bank remains convinced that the inflation will correct itself from 5% to the target 2%, during the year. Hence, no change in monetary policy was discussed.
The geopolitical tension between Russia and Ukraine continues to be a factor to keep in mind. The consequences of an escalated conflict can lead to enhanced volatility on the energy markets. The coming period, we can look forward to the fourth-quarter of 2021 earnings season. It’s promised to be an interesting one, as 33% of S&P500 companies report earnings growth above expectations.
Another terrible week for investors. The MSCI dropped another 2,89% and the AEX dropped another 2.54%. Notwithstanding the horrible YTD returns, my prime emotion, looking at ranking, is pride. There are only two investment groups (VAE Victis and CFQ) who, in total returns, performed worse than the MSCI. Negotium Novum soared to the top and Batavia Investments seems to feel so at home in the right row that they decided to crown themselves “King of the right row”. There are still a lot of groups not participating in the competition. I would, once more, urge groups to get into the game as the deadline for entry is fast approaching.