This month’s Market Watch key points include:
Global stocks in January staged their best month in more than three years after the Federal Reserve signalled that it no longer held to the forecasts it issued in December when it indicated it expected to conduct two rate increases in 2019. The Fed’s apparent shift towards a ‘neutral’ interest-rate policy overcame doubts about China’s economy, a record disruption to US government services due to a political fight over funding to build a wall along the Mexican border, an economic slowdown in Europe, and heightened uncertainty about the UK’s impending departure from the EU. An increase in the Australian dollar reduced gains for those who have unhedged investments in global equities. During the month, all 11 sectors rose in US-dollar terms. Real estate (+10.5%) and energy (+10.3%) surged most while consumer staples (+4.9%) rose least. The Morgan Stanley Capital International (MSCI) World Index rallied 7.8% in US dollars, its best performance since October 2015, and added 4.1% in Australian currency.