Investment

General Markets Comments – February

by Pierre Mouton

February General Markets Comments

War, what is it good for? Absolutely Nothing. It ain’t nothing but a heart-breaker, Friend only to The Undertaker. Oh, war it’s an enemy to all mankind Edwin Starr, 1969

It is a heart-breaker to talk about markets in the current environment when we know what’s happening in Ukraine, with consequences far beyond financial markets.

In this highly frightening context, it should come as no surprise to witness weakness overall for most assets, barring some of the traditional safe havens like Gold (up 6.2% in February, but only 4.4% year to date), the US dollar or the Swiss Franc.

Equities fell, but so did Government bonds, which is quite amazing in such an environment, even though they ended up stronger this month than they had started. The US 10 year saw its yield rise by 5 basis points, the German Bund by 12 basis points, and to highlight the risk-off attitude adopted by investors, the Italian 10 year yield jumped by 40 basis points. Credit suffered its second consecutive month of significant drawdown with a -2.4% return for the Itraxx Crossover in February (-4.4% year to date).

On the equity side, despite encouraging earnings publications, there were no places to hide: the MSCI World abandoned 2.7%, the S&P 500 3.1%, the MSCI Europe 3.2% and the MSCI Emerging Markets 3.1%; Japan showed some resistance with a limited 47 basis points retreat for the Topix.

Heightened tensions in commodity producing regions, added to the perspective of severe sanctions against Russia, propelled most commodity prices to the upside: Oil surged by 8.6% and is now up 27.3% in 2022, while the broad CRB Commodity Index added 5.5% in February (+15.8% year to date).

Such a strong performance from Commodities, coupled with steady levels of interest rates, clearly favoured Value sectors in equity markets: although the MSCI World Value was down 1.8% for the month, it fared much better than the MSCI World Growth which fell 3.6%; on a year-to-date basis, the former is only down 3.1% while the latter largely lags with a negative 12.6% return.

 

 

 

 

 

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

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