Commentary
All major global equity indices declined during the past week, as geopolitical headwinds in the Middle East and mixed signals from the US Fed officials weighed heavily on markets.
On the macroeconomic front, it was comments by Richmond Fed President Thomas Barkin that concerned the markets. According to Barkin, demand in the US economy may not be cooling with sufficient pace (Tuesday’s retail sales data serves this position well). Importantly, however, the Fed Chairman Powell’s speech was seen as slightly more dovish, as he pointed out that the current yields may prove restrictive enough to tame inflation further.
In the US, declines were largely similar across equity styles. However, the large-cap value stocks held up relatively well (-1.8% w/w), while the large-cap growth stocks saw a sharper decline (-2.9% w/w).
In China, increased pessimism about the real estate sector outweighed a stronger-than-expected GDP print, causing the Chinese equities to follow the suit of Western peers.
