Quarterly Market Review

The challenges that investors grappled with during the first quarter have now started to weigh on consumers, which has knocked broader confidence. Central banks moved to tighten monetary conditions rapidly to prevent wages chasing high price pressures. However, the continued war in Ukraine is hitting households by raising food and energy costs. As household incomes fail to keep pace, a cost-of-living crisis is at the core of concerns around waning consumer demand. These factors will continue to exert pressure on global growth, with the equity market falling out of favour with cyclical stocks and preferring defensive sectors. Bond prices sold off dramatically but, after the Federal Reserve (Fed) expedited its pace of tightening, found some support at the end of the quarter.

At a glance

• Inflation remains high
• Real wages remain under pressure
• Pace of expected tightening from central banks accelerates

• Bond markets move lower to price in higher rates
• Equity markets correct to reflect the above challenges