Quarterly Market Review

The third quarter of 2021 started well, and many equity markets made new post- pandemic highs. However, as the quarter progressed, the spread of the delta variant, supply chain concerns, events in China, and the prospect of a withdrawal of pandemic relief measures, weighed on markets. Asian equities ended lower, but ultimately, many developed markets ended the quarter little changed. The debate continues over whether the rise in inflation is ‘transitory’ as central bankers believe, or more permanent, as some investors fear. As we enter the final quarter these contrasting views are likely to continue to add volatility to markets. The ongoing debate over the US government budget and the debt ceiling will only add to the uncertainty. Uncertainty discourages investors who are inclined to sit on the side lines, as a result there is plenty of cash waiting to be deployed when the doubts that plague the market at present ease.

At a glance

• Supply chain concerns increase
• Rising energy costs dampened sentiment
• Inflation uncertainty remains high

• Central banks indicate tightening to come
• Regulatory clampdown in China
• Equity markets resilient