News and Research
Following the largest economic declines since the Great Depression, the recovery has exceeded earlier expectations with the promise of several successful vaccines in the fourth quarter supporting a positive 2021 outlook. The full effect of monetary and fiscal stimulus policies is likely to extend throughout next year, with growing optimism that pent-up consumer demand for service industries hampered by restrictions could deliver a wave of growth.
In the third quarter, most major equity benchmarks delivered positive returns, extending the recovery off March lows. Corporate earnings are projected to stage a sharp rebound from the declines reported in the second quarter and are estimated to recoup much of those losses by the end of 2021.
In the second quarter, the MSCI World Net Index advanced 19.36% overcoming mixed economic data, climbing infection rates, and escalating political tensions.
In the first quarter, global equity markets retraced several years of gains and declined to levels not seen since the end of 2016. Global volatility is likely to remain elevated despite large and coordinated global fiscal and monetary stimulus packages.
“May you live in interesting times” is an English expression often attributed to be an old Chinese curse. Though no Chinese saying to this effect has ever been traced, whatever its origin, the words are certainly apropos today.
Understanding the Difference in U.S. and non-U.S. Equity Performance Since the 2008 Financial Crisis
In the fourth quarter, markets successfully navigated events including a U.S.-China trade deal and a clearer Brexit outcome. A broad-based rally contributed to the MSCI World Net Index delivering its highest annual return within the past decade.
When using the same monthly return series, the choice of ending month for presenting 12-month return data can make a big difference in the impression that the data makes.
Read our global equity research report on decomposing volatility and the relationship between cross-sectional volatiltiy and active managment