Market & Topical Perspectives

2Q21 Market Overview: Summer Wind

2Q21 Market Overview: Summer Wind

2Q21 Market Overview: Summer Wind

With the Covid-19 pandemic in retreat in some—but certainly not all—parts of the world, financial markets were swept by a warm breeze of optimism as spring turned to summer, with many broad-based indexes improving upon their early-year gains during the second quarter. Notably, the reflation trade that had prevailed since September appeared to lose steam; many of the themes that dominated the markets’ initial pandemic rebound returned to the fore over the past few months, as investors returned their focus to growth stocks from value stocks and to large caps from smaller names, with a bias toward US-listed companies.1

1. Source: FactSet, data as of July 1, 2021.

    Key Takeaways

    • Key-Takeaway

      The rebound in business confidence during the second quarter was striking, though much of the anticipated improvement in economic activity may already be priced into markets.

    • Key-Takeaway

      Recent inflation data is ratcheting up the pressure on the Federal Reserve and providing the first real test to its recently adopted inflation-targeting policy framework.

    • Key-Takeaway

      Asian markets—China and Japan, in particular—failed to participate in the second quarter updraft, highlighting the value of geographic diversification.

    • Key-Takeaway

      Given the uncertainties ahead, we believe the all-weather approach of First Eagle’s Global Value team—which focuses on resilient businesses across sectors and geographies available at what they believe to be attractive valuations—is well positioned for whatever may come next