6 March 2023

Equity markets still focused on possible inflation developments

Yet another week in which equity markets focused on the possible inflation developments across and across the ocean. In the end, as far as equities were concerned, the more optimistic line prevailed, with the stock markets managing to close the week in profit. On the bond front, however, the rise in yields seemed to indicate something different, namely more rate hikes in the coming months.

In the past week, 70 per cent of the instruments and indices used for our analysis recorded a positive change. 28% experienced a negative change. Analysing by macroclass, 76% of the equity instruments and indices recorded a positive weekly change. 26% of bond instruments and 89% of the other asset classes used for our analysis.

Improving valuations in the past week accounted for 28% of the total. The previous week, valuations that had been adjusted upwards were 23% of the total.

In our analysis of equities, improving valuations were 20% of the total. Interestingly, our weekly analysis continues to indicate that European equities are the most “liked” by investors in the short to medium term.

In our analysis of bonds, improving valuations accounted for 68.75 per cent of the total, with investors continuing to favour short and medium-term duration.

Among analyses of other asset classes, improving valuations accounted for 47% of the total. This included analyses on commodities as well as sentiment and currencies.

Of the valuations, 25% were above the short-term average. 25% were above the long-term average of valuations. Last week it was 21% and 24% respectively.