Indices in bearish territory growing on rising inflation

March 15, 2022 (MLN): As risks pile up for global equity markets from soaring inflation and central bank policy tightening to the economic fallout from Russia’s invasion of Ukraine, the list of indices that have fallen into the bear market territory is growing, a report by Bloomberg noted.

The technology-heavy Nasdaq 100 Index was the latest major gauge to enter a bear market on Monday. It joins a host of other major stock indexes around the world, from China’s CSI 300 to Germany’s DAX, that have dropped 20% or more from recent highs at some point this year, it added.

The report further said, “Among major gauges that classified as bear markets this year, Europe’s Euro Stoxx 50 and the DAX have both since recovered some losses.”

Meanwhile, MSCI Emerging Markets Index, have been losing more ground, while China’s CSI 300 is continuing to experience a brutal selloff amid risks including persistent regulatory pressures, new Covid lockdowns, and sanctions fears over China’s relationship with Russia.

Among others to watch are Japan’s Nikkei, which is on the verge of entering a bear market. The MSCI AC World Index, meanwhile, is down 13% from recent highs. That gauge has tipped into bear market territory five times in the past 20 years, with the drawdown during the 2008 global financial crisis having been by far the biggest, it added.

The extreme volatility seen in markets this year has also driven 52-week lows for single stocks to the highest level since the Covid-19 pandemic first roiled markets in March 2020. And for Apple Inc., the world’s most valuable company, a selloff of 17% from its January high has put it within sight of bear territory.

As the bear market list grows, investors have been seeking out new havens in asset classes and countries. Bank of America Corp.’s March fund manager survey showed that allocation to cash among clients has risen to the highest since April 2020, while exposure to equities fell to the lowest in nearly two years.

Most investors in that survey now expect global equities to slump into a bear market this year as the growth outlook has tumbled to the lowest level since the 2008 financial crisis, the report highlighted.

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