4Q 2021 Market and Economic Overview

The report said the fourth quarter of 2021 completed a year in which global equities produced a double-digit return for the third consecutive year. The MSCI World Equity Index rose 6.39% in the quarter and 16.80% over the year. US equities rose 10.65% in the quarter and Swiss equities 10.59%, while Brazilian equities fell 5.55%, Russian equities 7.71% and Japanese equities 2.24%. The report noted that market breadth had narrowed: the average Nasdaq Composite stock was 39% below its all-time high and the average S&P 500 stock 11% below, and five companies accounted for 51% of S&P 500 returns since April 2021, according to a bank's analysis.

Central banks were moving towards tighter policy. The US Federal Reserve was ending its asset purchase programme, with its projections pointing to three rate rises in 2022 and a further three in 2023. The Bank of England raised its rate to 0.25% in mid-December and the Norges Bank had also raised rates, while the ECB appeared set to continue providing support until at least the end of 2022 and China's central bank was loosening policy. In a monthly fund manager survey cited by the report, hawkish central banks were the leading tail-risk concern for 2022.

Inflation was a central theme. US consumer price inflation of 6.2% compared with hourly wage growth of 4.6%. Eurozone headline inflation was cited at 4.1% and core inflation at 2.1%. The report cited 11.2 million US job openings against 7.4 million unemployed, and input prices in a global purchasing managers' survey at their highest in 13 years.

The Omicron variant was identified in late November, and markets, including crude oil, fell sharply in response. In currencies, the euro fell 1.84% against the US dollar over the quarter to 1.14 and sterling rose 0.42% to 1.35, while the dollar rose 3.42% against the yen to 115.08. Gold rose 4.08% to USD 1,828.39 and WTI crude rose 0.25% to USD 75.63. The report also discussed the divergence of monetary policy between regions and the outlook for inflation in 2022.

Important information: This snapshot summarises MWC Group's market commentary for the period shown and is provided for general information only. It is not investment, tax or legal advice, a personal recommendation, or an offer or solicitation to buy or sell any investment, and it does not take account of your personal circumstances. Views and figures reflect conditions at the date of publication and may since have changed. Past performance is not a reliable indicator of future results. The value of investments and any income from them can fall as well as rise, and you may get back less than you invested. Exchange-rate movements can affect returns. Market data comes from third-party sources believed to be reliable, but its accuracy cannot be guaranteed. Please seek personal advice before making any investment decision. Issued by Manentia Wealth Consulting Group Limited (C80087), licensed by the Malta Financial Services Authority.