We look at returns of various asset classes such as equity, debt, gold, crude oil and the Indian rupee in our latest monthly market summary.
We use data for these charts from Investing.com
All major global equities have given spectacular performance over the medium and long term. As can be seen in the chart above, every major market has given returns in excess of 15 per cent over the last year. Emerging markets and India in particular saw a strong rally in the month of December.
The 10 year G-sec yield has been moved up sharply over the last few months and closed December at roughly 7.3 per cent. This reflects both global and local trends. On the global front, there is continuing indications of monetary tightening. In addition, global growth has started to pick up and there has been a surge in commodity prices creating expectations of a further rise in rates. On the local front, inflation is picking up and there are indications that the government may find it difficult to maintain its fiscal deficit targets. All these factors are probably weighing on the debt markets, leading to a rise in rates.
While gold rallied sharply in December, it continues to trade in the 1200-1400 dollars per ounce range. A strong move of gold outside of this range would give a better indication of its long term trend.
We have switched the oil charts from using WTI Crude to Brent Oil because that largely reflects the standard used by our local news papers and so is a more direct comparison. Oil has rallied strongly in December on account of global factors. This is part of a broader surge in commodity prices but also reflects demand-supply dynamics of the oil markets. Supply has been constrained due to OPEC restriction and little new drills coming online from US Shale exporters. Meanwhile with global growth picking up, demand has been growing. Because of our large dependance on oil imports, this is hugely concerning on the fiscal front.
The Rupee has generally been stable against most currencies in December, with the exception of the Yen where there was a slight appreciation.
Rishad is the founder of Kairos Capital. He started his career with Standard Chartered Wealth Management and has extensive experience in markets, particularly in terms of mutual funds and stocks.