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 20 per cent over the last year. All markets rallied strongly in January, with India and other emerging markets moving up 6 per cent while developed markets moved up around 4 per cent
The 10 year G-sec yield has moved up sharply over the last few months. From a yield of under 6.5 per cent in August 2017, the bond yields are now over 7.6 per cent. Yields moved up even more sharply post budget because of macro concerns on fiscal slippage by the government. On the global front, there is continuing indications of monetary tightening and, with global growth picking up, there has been a surge in commodity prices creating expectations of rise in global yields. All these factors are probably weighing on the debt markets.
While gold continues to rally, it still trades 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.
Oil has remained high in January 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 was stable against the Dollar in January but has depreciated significantly against the Euro, the Pound and the Yen. This reflects global trends of Dollar weakness.
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.