Q1 2018 Investment Review

April 16, 2018

Market moves in sharp jumps up and down

US Quarterly Update Q1 18


Read the transcript


I'm Kevin Barr, Head of SEI's Investment Management Unit. Over the next few minutes I will provide an overview of our global financial markets and our perspective on them.

The first quarter of 2018 opened with a impressive rally in equity markets that quickly disappeared. By early Febuary, the S&P 500 Index fell into correction territory, recording a 10% drop from its late January peak. It was a stark reversal of the trends seen in 2017.

The remainder of the quarter was marked by a resurgance of volatility. Concerns about rising interest rates persisted as the possibility of a trade war with China loomed. The market moved up and down in sharp jumps, ending the quarter down 0.76% and marking the first quarterly loss since the second quarter of 2015.

The MSCI All-Country World Index, a proxy for global equity markets, moved in lockstep with U.S. markets, ending the quarter down 0.96%. From a sector standpoint, telecommunication services and consumer staples led the decline. Only information technology and consumer discretionary posted gains.

Fixed-income markets reflected the challenges in the equity markets, as rising interest rates pressured the more rate-sensitive segments.

The yield on the ten-year U.S. Treasury, a benchmark for domestic bond markets, started the year at 2.46%. It rose to nearly 3% at mid-quarter as the Federal Reserve raised interest rates and investors worried about inflation, before sliding to end the quarter at 2.74%.

Looking ahead, we expect market volatility to remain elevated. A trade war with China and a variety of geopolitical risks have recently come to the forefront. Rising inflation and interest rate hikes by the Federal Reserve continue to be areas of concern. While elevated stock market valuations are also on our radar, we still believe low bond yields and strong profit growth justify the prices.

Despite the unpredictability of geopolitical events, we plan to stay on course until we see a significant deterioration in economic and financial fundamentals. That noted, proper planning is never more critical than when a long bull market enters its final stage. We encourage investors to evaluate their position and make sure they are aligned with your goals.

On behalf of everyone at SEI, thank you, as always for your trust and confidence.

The S&P 500 Index is an unmanaged, market-capitalization weighted index that consists of the 500 largest publicly traded U.S. companies and is considered representative of the broad U.S. stock market

MSCI ACWI Index is a market capitalization weighted index composed of over 2,000 companies, and is representative of the market structure of 46 developed and emerging market countries in North and South America, Europe, Africa, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars.

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This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice and is intended for educational purposes only.

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