After a tentative upward movement in January, sentiment improved on the equity markets in February. Gains were noted in all the major regions, with little difference between the upturns. Several indices, including the US S&P500 and Japanese Nikkei, set new records. February’s gains translated into a significant improvement for emerging markets and especially China. Equities succeeded in maintaining the upward trend despite the higher bond yields. Both short and long-term yields climbed in the US, UK and Germany. The main reason for this was expectations that central banks will cut interest rates later than previously anticipated. The optimistic mood was also reflected in the tighter spreads on credits, especially in the high yield asset class. The higher bond yields and negative news about the sector meant that real estate was unable to profit from the positive sentiment.

Please see Van Lanschot Kempen’s Asset Allocation Outlook for March. The highlights this month are:

• Equity markets set new records
• Cuts to interest rates pushed back
• Position in US government bonds reduced in favour of Eurozone