Value-oriented and cyclical sectors such as Energy, Financials, and Industrials outperformed growth-oriented sectors such as Technology and Health Care.
The rotation into cyclical re-opening stocks that began in 2021 continued into 1Q22. The S&P 500 fell 4.6% in a volatile quarter that included a maximum drawdown of more than 12%, as significant dispersion by style, sector, and country had a major influence on underlying stock performance. Treasury 10-year yield rose by 70 bps to 2.33%, as the Fed began the process of being more aggressive in combating rising inflation. Investors continue to seek clarity around China’s worsening COVID-19 outbreaks and lockdowns in major cities including Shenzhen and Shanghai.ĭespite the ongoing conflict in Europe, the Federal Reserve moved ahead with a 25 basis point increase in its policy rate, its first since 2018, and projections showed six more hikes for the remainder of the year. Asia was not immune to this market volatility, as Chinese stocks declined as well, likely sparked by the underperformance of growth-oriented companies globally. Economic sanctions on Russia caused oil prices to hit their highest levels since 2014, intensifying inflation concerns as central banks increased their hawkish rhetoric. Global market volatility spiked during 1Q22 following Russia’s invasion of Ukraine.