Tricky transition favours stock picking

Key points
The MSCI All Country World (global shares) Index fell -4.9% in USD in January, and with the New Zealand dollar weakening in the past month, the same Index fell -0.9% in NZD terms over the month.

The New Zealand equity market (S&P/NZX 50 Gross with imputation) finished the month down -8.8%, whilst the Australian equity market (S&P ASX 200) fell -6.4% over the month (-5.3% in NZ dollar terms).

The New Zealand 10-year bond yield rose to 2.60% from 2.39% during January, while the US 10-year bond yield rose from 1.51% to 1.78%. These moves led to global bond indices declining over the period.

A sharp lift in interest rate expectations and strong inflation prints contributed to a broad ‘risk off’ move in markets. The pricing of high growth stocks was hit hard, albeit hardly any company was spared by the broad market sell-off.