Insights

Risk appetite returned in June

Optimism among investors was evident in June, when global equity markets saw broad-based increases. All 11 Global Industry Classification Standard sectors (such as Information Technology, Health Care, Real Estate and Communication Services) saw progress with Consumer Discretionary at the top of the return hierarchy, up 9.9%, and Utilities at the bottom, up 2.3%. In June, Information Technology generated a return of 5.7%. Investors were attracted to the sector because of the focus on AI. Overall, MSCI ACWI increased by 5.8% measured in local currencies, while the index increased by 3.1% measured in DKK.

Tech dominance in May overshadowed flat returns on most asset classes

The tech sector dominated global equity markets in May. Investors have shifted their focus to artificial intelligence, which lifted the Info Tech sector by 8% last month. This overshadows a general negative return development in most other parts of the equity market. The Energy and Materials sectors were at the bottom of the return hierarchy with returns of -9% and -7%, respectively. Overall, MSCI ACWI decreased by 0.3% measured in local currencies, while the index increased by 2.5% measured in DKK.

Appetite for risky assets in April – but defensive sectors took the lead

The overall financial market trend in April showed renewed appetite for risky assets. Global equities gained 1.4% according to MSCI ACWI in local currencies. MSCI ACWI remained unchanged in April, in DKK. Generally higher equity indices were, however, led by defensive rather than cyclical sectors. High returns were generated by Consumer Staples/Health Care, while low returns were generated by Semiconductors/Consumer Discretionary. MSCI World Defensives yielded a return in April of 3.7%, outperforming MSCI World Cyclicals at 1.0%.

Intervention in banking sectors stabilised financial markets in March

Banking turmoil affected the financial markets in March, leading to large yield declines on government bonds. This put risky assets under pressure until the US and European authorities set up lending facilities and loss guarantees. Intervention led to renewed risk appetite at the end of the month.