Uncertainty presents investment opportunity
September was a difficult month for global equity markets, particularly for emerging markets. Macro data, meanwhile, has continued to highlight the relative strength of the US economic recovery, says Stephen Anness, global equities fund manager at Invesco Perpetual.
September was a difficult month for global equity markets, particularly for emerging markets. The MSCI AC World Index was down -0.84%. Latin America and Asia ex-Japan were the weakest markets, with the MSCI EMF Latin America index down -9.79% and MSCI AC Asia Pacific ex-Japan down -4.98% respectively. Japan and the US performed well with the MSCI Japan index up 1.83% and the S&P 500 up 1.01%, while Europe ex-UK was down -0.66% in the month (all numbers are total returns, GBP).
Macro data this month has continued to highlight the relative strength of the US recovery. Manufacturing data, unemployment data and US capital expenditure are just three of the many data points that demonstrate this.
Data for many other parts of the world has been disappointing. Europe, in particular, has seen negative revisions to GDP data, despite the continued efforts of the ECB to stimulate bank lending and economic recovery. It is difficult to disaggregate the impact of geo-political tensions in Ukraine/Russia from the underlying issues in Europe but clearly the situation has negatively impacted consumer sentiment.
With the US continuing to recover, the US$ strengthened markedly last month as the US Federal Reserve (Fed) approaches the end of quantitative easing, and investors look ahead to rising interest rates in H1 2015. Unsurprisingly, the stronger US$ created reactions across different asset classes and caused an uptick in the VIX (an indicator of volatility) which earlier in the year had approached record lows.