There were so many factors which moved markets in 2018 it’s difficult to summarise with relative brevity but we will attempt it, nonetheless. In the first quarter markets rose and declined twice sharply, as the outlook for the global economy and the anticipation of central bank accommodativeness ebbed and flowed. At this point the ‘buy the dippers’ and momentum players were still in fine fettle, any equity selloff was simply an opportunity to go again. By the beginning of May, this had taken us basically nowhere, with only the Technology sector in definitively positive territory.
We then had the grand divergence between the US equities, which were already expensive relative to their own history and the peer group. The dollar went from strength to strength, hurting emerging markets and reinforcing the just buy US equity trend.
For the next five months things were all going swimmingly US wise, come October however, the world changed, many Tech stocks started to unravel for various but idiosyncratic reasons and earnings downgrades started to appear.
Suddenly there seemed to be a dearth of reasons for global economic optimism and hence the quarter 4 correction.
2019 has started, so far, in a more positive direction.