Asia and US behind global equities gains in Q3
Schroders quarterly markets review
Global equities rose in the third quarter but there were regional differences, with Asia and the US outperforming Europe and the UK, according to the latest Schroders quarterly markets review.
It reported that US equities gained in the third quarter, supported by a growing economy and monetary policy.
"The Fed will now use average inflation targeting (AIT) in setting the policy interest rate, allowing for temporary overshoots in inflation," Schroders said.
The asset manager wrote that eurozone stocks remained flat over the quarter as worries took hold over sharply rising Covid-19 infections in many European countries.
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According to the quarterly review, the biggest falls in the eurozone region were in the energy and financial sectors, while materials and consumer discretionary advanced, with automotive and luxury goods stocks "generally faring well".
UK equities performed poorly compared to others, with the market's exposure to oil and financial sectors having a detrimental effect.
Schroders reported that fears over a disorderly Brexit and the implications of a second Covid-19 wave also weighed on sentiment during the period.
However, the Japanese equity market saw gains in the third quarter, with the Topix index recording a total return of 5.2% and across the quarter as a whole, the market was led by strong momentum in higher valuation stocks.
Schroders said Japanese small-cap stocks were "notable outperformers" in September and have now more than recouped the sharp underperformance seen during the market turmoil in the first quarter of the year.
Asia ex Japan equities had a robust third quarter led by Taiwan, where IT sector stocks "underpinned gains".
According to the quarterly report, India, Korea and China all posted double-digit returns and outperformed the MSCI Asia ex Japan index.
Emerging markets posted a strong third quarter, Schroders said, "aided by optimism towards progress on a Covid-19 vaccine and ongoing economic recovery".
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It revealed that the MSCI Emerging Markets Index rose in value by 9.6% during the quarter, outperforming the MSCI World index (7.9%).
Taiwan, and South Korea were among the best-performing index markets, while China also finished ahead of the index as the economy continued to recover.
In global bond markets, Schroders identified corporate bonds as having "enjoyed a decidedly positive quarter, as riskier assets were broadly buoyant and monetary policy helped anchor yields at low levels", with investment grade returning 1.8%, while high yield debt returned 4%.
In its quarterly review, Schroders revealed that livestock and agriculture were the best-performing components among commodities, while energy posted a slight fall and was "the only component to finish in negative territory".
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