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Daily update: January 25, 2023

 

Start each day with our analysis of the most relevant events affecting the markets today, as well as a curated selection of our latest and most important insights on the global economy.

Wounded US stock investors may find optimism in bear market history

Investors suffering losses from the selloff in US stocks in 2022 can take comfort in how stocks have performed since previous bear markets.

The S&P 500 has gained an average of 15% in the three years since entering a bear market, according to an S&P Dow Jones Indices analysis of 12 such declines from 1929 to 2019. The indicator entered the last bear market on June 13, 2022 after dropping 20% ​​from its peak at the beginning of the year.

“At the end of every bear market, there is a bull market,” Sherifa Issifu, senior U.S. stock index analyst at S&P Dow Jones Indices, wrote on her Indexology blog. However, history “shows the importance of being cautious in a bear market.”

Stocks have rebounded from the worst of the 2022 downturns, with the index up about 10% since the mid-October low, fueled by optimism that the Federal Reserve might not raise rates as quickly as previously feared. The recovery was limited by continued economic problems, including a slowdown in US manufacturing and the worst S&P Global Financial Volatility Indicator since the global financial crisis.

“With aggressive policy normalization and an expected recession, financial conditions are likely to worsen further this year,” Beth Ann Bovino, chief US economist at S&P Global Ratings, wrote in an economic research update.

Looking at previous bear markets, the S&P 500 posted positive three-year returns eight times out of 12 after entering a bear market through 2019. Another positive example is just around the corner as March marks the third anniversary of the 2020 COVID-19 bear market. .

The largest three-year rebound in the study was a 63% increase under President Ronald Reagan through 1985. The worst result was a 75% drop after the index went into a bear market during the Wall Street crash of 1929.

For the year, stocks are up 9% on average after entering a bear market, with only five losses out of 13. The post-COVID-19 panic rally in 2020 led the way with stocks up 59% in 12 months.

The last bear market entry was in June 2022, so we can only compare six months of results. This is favorable because, according to S&P Global, the gain of 5% has exceeded the average of 1% for all bear markets since the beginning of 1929.

However, the index declined after hitting a six-month mark in December amid an unclear economic picture. For example, according to the JPMorgan Global Manufacturing PMI, U.S. manufacturing deteriorated at the fastest pace since May 2020 in December. The increase in the Fed’s borrowing costs and continued high inflation have also weighed on the stock’s recent performance.

“Pressure from aggressive central bank rate hikes to combat inflation and recession fears ended a tough year for global markets,” S&P Global Research Signals said in a December report. Markets also started the new year on negative economic indicators.

Today Wednesday, January 25, 2023and here is today’s essential intelligence.

Written by Neil Denslow.

Economy

Dow Jones Dividend 100 Indices Part 2: Strong Fundamentals and the Benefits of Diversification

In the first part of this series, S&P Dow Jones Indices highlighted how rigorous dividend sustainability and quality reviews of the Dow Jones US Dividend 100 and Dow Jones International Dividend 100 indices could lead to their outperforming performance in 2022 and other inflationary periods. This issue analyzes the positive impact of these screenings on the fundamentals of both indices, and looks at examples of combining US and international indices to take advantage of the potential benefits of diversification.

—Read article from Dow Jones S&P Indices

Get more information about the global economy >

capital markets

An Evolving Private Equity Approach to Investing in Sustainable Infrastructure

The real asset sector plays a unique role in the robust investment landscape, and private investors are important and dynamic players in this asset class. With new rules around sustainability targets (under various labels including net-zero and ESG) and rising investor expectations for environmental impact, fund managers must navigate a market poised for significant change. On behalf of S&P Global Market Intelligence, Mergermarket surveyed 30 senior executives from real asset private equity firms, with respondents split evenly between the US and Europe. Questions focused on the state of private investment in sustainable infrastructure and real estate, as well as the prospects for sustainability-focused investment.

—Read article from S&P Global Market Intelligence

Learn more about capital markets >

world trade

Norway plans to include more Barents and Norwegian Sea blocks in new APA round

Norway plans to offer significantly more oil and gas blocks in the Barents and Norwegian Seas as part of the country’s next round of licensing mature sections of the Norwegian continental shelf, the Energy Ministry said on January 24. Expanding activities in the north is the key to further development. The ministry announced that it is holding public consultations on the awards round in pre-defined areas in 2023.

—Read article from S&P Global Commodity Insights

Get more information about world trade >

stability

New M&A guidance aims to minimize climate risks from oil and gas asset sales

Sellers of fossil fuel assets should require buyers to continue their climate change and emission reduction plans in line with the principles developed by the environmental investor group Ceres and the Environmental Defense Fund. A quick and dirty way for oil and gas companies to cut their carbon footprint is to sell emitting assets to smaller, often private firms, the groups said in a Jan. 19 report. However, this does not affect the global amount of carbon in any way, which may even increase if the buyer cancels emission reduction plans to save money.

—Read article from S&P Global Market Intelligence

Learn more about sustainability >

Energy and raw materials

Listen: Braking Forward: Understanding the Risks to Electric Vehicle Sales and Battery Metal Markets in 2023

Join S&P Global experts from our Commodity Insights and Mobility divisions as they explore the potential hurdles the electric vehicle market will face in 2023. From lithium price fluctuations to the end of government subsidies, find out how these factors could affect sales of electric vehicles and battery metals. market.

– Listen and subscribe to Platts Future Energy, a podcast from S&P Global Commodity Insights

Get more information about energy and products >

Technology and Media

Listen: Next in Technology | Episode 99: Like Vegas, CES is back!

The usual Las Vegas glitz and hype has been taken up a notch with the Consumer Electronics Show, now just CES, where the latest technology debuts. Analyst Neil Barbour joins host Eric Hanselman to take a look at what was a big step forward as the event returned to its pre-pandemic size. The crowds are back, but mind-blowing innovation has dwindled as automotive and industrial collaborations have taken center stage and display technology has improved. And yes, there were many metaverses.

– Listen and subscribe to Platts Future Energy, a podcast from S&P Global Market Intelligence

Get more information about technology and media >

Upcoming Events

CERAWeek by S&P Global – Navigating a Troubled World: Energy, Climate and Safety

Join global leaders, policy makers and decision makers from energy, climate, finance, technology and industry at CERAWeek 2023 for timely dialogue, shared learning and networking.

— Register for CERAWeek

Access to other S&P Global events >

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