Capital Group portfolio manager Mark Brett and economist Jens Søndergaard, both based in London, discuss possible implications of the Brexit vote for the U.K., the European Union and investors.
China affairs specialist Andrew Dougherty discusses China’s currency strategy and how its gradual approach to devaluing the renminbi has defied market expectations.
INVESTMENT INSIGHTS | February 2016 | FEATURING Mark A. Brett
MARKET COMMENTARY | January 2016
Global stocks delivered essentially flat returns as investor enthusiasm for the U.S. economic recovery was offset by concerns over a sharp slowdown in China. Aggressive central bank stimulus measures continued to support markets in Europe and Japan, while the U.S. gradually stepped back from accommodative policies. Emerging markets stocks generally lagged their developed-market counterparts by a wide margin. Mergers-and-acquisitions activity reached a record high, fueled by cheap financing.
Defensive stocks outpaced economically sensitive sectors. Health care and consumer staples stocks rallied, while energy and materials stocks plummeted amid falling prices for oil and other commodities. At the end of the year, the U.S. Federal Reserve raised interest rates for the first time in nearly a decade, setting the stage for tighter monetary policy in the years ahead. The U.S. dollar rose against the euro and most other currencies.
MARKET COMMENTARY | January 2016
Global stocks advanced amid surging M&A activity and a strong year-end rally in the technology sector. The Fed raised interest rates for the first time in nearly a decade, but cautioned that future rate increases would depend on the pace of U.S. economic growth. Conversely, central banks in Europe and Japan ramped up stimulus measures in an attempt to jumpstart lackluster economies. U.S. bonds fell and the dollar rose against the euro and the yen.
MARKET COMMENTARY | December 2015
Global stocks produced mixed returns amid investor worries about sluggish economic growth and expectations for higher U.S. interest rates. European equities advanced on the promise of new monetary stimulus measures, however, U.S. stocks were flat and emerging markets retreated. Bonds also declined as Federal Reserve leaders indicated that a rate hike is likely in December. The dollar rose sharply against the euro and the yen.
MARKET COMMENTARY | November 2015
Global stocks rallied as central bank stimulus and rising M&A activity helped offset ongoing concerns about a slowing world economy. Energy and materials stocks led markets higher amid signs of stabilization in commodity markets. Information technology stocks also advanced on better-than-expected earnings from some bellwether companies. Bonds were generally flat, and the U.S. dollar rose against the euro and the yen.
MARKET COMMENTARY | October 2015
Global stocks tumbled amid increasingly alarming signs of an economic slowdown in China and uncertainty over U.S. monetary policy. Energy and materials stocks plummeted on worries about declining global demand for commodities. Defensive sectors, including consumer staples and utilities, generally held up better than cyclical stocks. Government bonds rallied and the U.S. dollar slipped against the euro and the yen.
A portfolio manager discusses movements among emerging markets currencies and suggests that today’s environment can be advantageous for active investors.
A portfolio manager discusses Capital World Bond Fund’s approach to managing currencies and its recent gradual shift away from U.S. dollar-based securities.
MARKET COMMENTARY | September 2015
Global stocks plummeted as fears that China’s economy may be weaker than previously expected hit every sector of the markets. Financial and consumer discretionary stocks fell the most, particularly those with high exposure to Asia. Defensive sectors, such as utilities and telecommunication services, fared somewhat better. High-grade bonds were essentially flat amid concerns about rising U.S. interest rates. The dollar lost ground against the euro and the yen.
MARKET COMMENTARY | August 2015
Global stocks advanced amid improving economic data in the United States and an easing of the Greek debt crisis. Defensive sectors led markets higher as consumer staples, health care and utilities stocks rallied. Emerging markets stocks declined, weighed down by a sharp drop in Chinese shares and falling commodities prices. High-grade bonds gained from a flight-to-safety trade. The U.S. dollar rose against the euro, the yen and most other currencies.
Two portfolio managers discuss Europe’s progress in the recovery cycle and how currency and valuations shifts have created investment opportunities.
MARKET COMMENTARY | July 2015
Global stocks produced mixed returns as signs of improving economic growth were offset by fears of rising interest rates and a worsening debt crisis in Greece. Telecommunications stocks proved to be a bright spot, driven higher by M&A activity, while the rate-sensitive utilities sector fell the most. Emerging markets stocks advanced, supported by monetary easing in China. Bonds declined and the dollar slipped 4% against the euro.
INVESTMENT INSIGHTS | June 2015
The situation in Greece remains very fluid. Unwilling to implement certain proposed austerity measures, the Greek government has rejected the proposal for an extension of the financial bailout package by its official creditors. That said, it is not a foregone conclusion that this will lead to a significant debt default or Greece’s exit from the eurozone.
Nevertheless, the possibility of both events has increased, leading to greater caution among investors and a flight to safer, more liquid financial assets. The next week is an important one and we will continue to monitor events closely. According to media reports, a last-ditch effort to broker a deal between the Greek government and its creditors may be underway.
MARKET COMMENTARY | June 2015
Global stocks managed a slight gain as investors reacted to mixed reports about the pace of worldwide economic growth. Technology and health care stocks rallied, while the energy sector continued to feel the impact of volatile oil prices on corporate earnings. Japanese stocks advanced on improving economic data. Emerging markets declined amid fears of higher U.S. interest rates. Bonds declined and the dollar rose against the euro and the yen.
MARKET COMMENTARY | May 2015
Global stocks rose modestly amid a strong rally in the energy sector. Rising oil prices, surging M&A activity and central bank stimulus measures helped to support world stock prices despite a slowdown in U.S. economic growth during the first quarter. Emerging markets rallied as market observers pushed back the timing of an increase in interest rates by the Federal Reserve to later in the year. Bond markets declined and the dollar lost ground against the euro, the pound and most other currencies.
MARKET COMMENTARY | April 2015
Global stocks advanced amid rising M&A activity, heightened central bank stimulus measures and signs of renewed economic growth in Europe and Japan. Health care stocks enjoyed a strong rally, driven by several large acquisitions, while the energy sector lagged as oil prices continued to slide. U.S. bonds rallied, with investors favoring them for their relative value as yields in Europe and Japan touched record lows. The dollar rose sharply against the euro and most other currencies.
MARKET COMMENTARY | November 2014
Global stocks advanced amid a strengthening U.S. economy and heightened economic stimulus measures in Europe, Japan and China. Information technology and consumer-related stocks rallied, while the energy sector was hit by falling oil prices. Emerging markets fell slightly, pressured by fears of higher U.S. interest rates and lower commodity prices. Bond markets generally posted modest gains as inflation expectations remained muted. The dollar rose against the euro, the yen and most other currencies.
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