In Search Of Assets To Outperform Inflation

In the US, after dumping stocks of technology majors, investors were seen taking shelter in more defensive parts of the markets

Over the last few weeks, equity markets in the US have witnessed a cautious approach by investors. NASDAQ tumbled by 4.18 per cent during the fortnight while S & P 500 was down by 0.43 per cent mainly owing to weakness in technology stocks. After dumping stocks of technology majors, investors were seen taking shelter in more defensive parts of the markets. In Europe’s markets, Germany’s benchmark index DAX has been going back and forth as investors are heavily taking advantage of ‘buy-on-dips’ opportunities. 

It is observed that the DAX index is one of the favourites of traders around the world and hence when they put money to work in stocks, it makes sense that they would go rushing towards the DAX initially. During the fortnight, DAX gained by 1.72 per cent. As of now, it seems that traders all over the world are looking to find assets that will outperform inflation. FTSE 100 rose by 0.90 per cent during the fortnight owing to gains in heavyweight mining and energy stocks and also as better-thanexpected jobs’ data strengthened views of a stronger economic recovery from a pandemic-driven crash last year.

But still the FTSE 100 remained shy of strong gains as concerns spooked investors regarding the Indian corona virus variant and possible hurdles in the easing of the lockdown in order to remain on track. As US Treasury yields eased and a drop in commodity prices helped ease inflation fears among investors, French benchmark index CAC 40 rose by 1.56 per cent during the fortnight. Stocks in Hong Kong fell after China’s latest bank lending data missed forecasts and Sino-US tensions weighed heavy.

Hong Kong’s Hang Seng index was down by 1.93 per cent during the fortnight. On the other hand, China’s Shanghai index jumped by 2.05 per cent during the fortnight led by gains in energy and transport firms though Sino-US tensions capped further gains. Investors were seen taking advantage of investing opportunities in healthcare, banking and securities stocks of firms with low valuations and also of new energy and liquor firms with solid growth. The Shenzhen Component index was up by 0.10 per cent for the same period of time.

Other Asian indices such as Japan’s Nikkei index, Singapore’s Straits Times index and South Korea’s KOSPI index slipped by 3.43 per cent, 4.31 per cent and 0.55 per cent, respectively. Canadian index, S&P/TSX Composite index rose by 1.92 per cent during the fortnight whereas Brazil’s BOVESPA index zoomed by 3.40 per cent during the fortnight. The S&P/ASX 200, which is considered the benchmark for Australian markets, ended the fortnight in the positive territory, gaining by a mere 0.09 per cent.