Schroders Equity Lens: your go-to lens on global equity markets
Our Q1 analysis highlights the charts and data that matter to global equity investors.
What’s been driving stock prices? Are they currently expensive or cheap? And which regions and sectors are poised to do well next?
These are some of the questions we aim to answer in our quarterly publication – the Schroders Equity Lens, a compilation of key trends in global equities illustrated through thought-provoking charts.
Click here to download your Q1 copy.
Global equities ended the year on a high note, rallying by 6.8% in Q4, as a strong earnings season coupled with a relatively stable interest rate environment supported performance.
However, the spread of the Omicron variant, rising inflation and waning monetary stimulus weighed down on valuations.
The best performing region was the US (+10.1%). Europe (+5.8%) and UK (+5.6%) also performed reasonably well (all in local currency terms). In contrast, slowing Chinese credit growth hit EM (-0.4%) and Japanese (-3.9%) returns.
In terms of sectors, performance was relatively mixed across cyclicals and defensives. IT was the highest returning sector (+12.7%), but defensives also did reasonably well, including utilities (+10.4%) and real estate (+9.1%).
Communication services (-1.5%) and energy (+3.3%) were the lowest returning sectors.
Global earnings revision momentum decelerated sharply in Q4. It remains positive in all major equity markets, except EM.
According to our composite valuation indicator, UK and Japanese equities are now trading close to their 10-year historical average.
Meanwhile, EM equities have derated significantly since their peak in January 2021 and are only slightly expensive. In contrast, US and Europe continue to look expensive on most valuation metrics.
In terms of global sectors, energy, financials and materials offer the best relative value. IT, communication services and consumer discretionary look the most expensive.
This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.
All data contained within this document is sourced from Cazenove Capital unless otherwise stated.