Re-emerging political volatility
Near term political and economic uncertainty has not spooked investors grappling with the impact of rising US interest rates on the global economy. Traders now bet that a mid-March Fed rate hike has become a near certainty while investors wait for the next catalyst for stock prices to continue breaking records or for political uncertainty to re-emerge. In the meantime, low volatility markets press on as value continues to trump momentum across most regional markets.
- US: Demand Supply Ratio outperformed among large caps, while small caps bucked the global trend favouring undervalued stocks
- Developed Europe: Value and growth factors rebounded last month, represented by Forward 12-M EPS-to-Enterprise Value and Reinvestment Rate, respectively
- Developed Pacific: Value (e.g., Book-to-Market) was highly rewarded at the expense of price momentum (e.g., Rational Decay Alpha)
- Emerging markets: High beta and value themes were well rewarded across emerging markets
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