Money supply continued to be reduced globally  and with the background of continuing high inflation and reasonable employment figures, central banks look to commence quantitative tightening and raise interest rates. This was negative for equity markets. The FTSE All-World Index declined 7.9%.

The Global Equity Growth Portfolio was slightly more resilient declining 7.5%, while the peer group of global growth funds  (EAA Fund Global Large Cap Growth Equity), declined by 9.7%. Reliance Industries +5.2%, Wickes +3.9%, Eli Lilly +2.0% were the best performers.

The worst performing positions were Amazon (-24.0%), Enphase (-20.0%) and Axon (-18.5%). Amazon reported quarterly revenue growth of 7.3% which was in line with expectations however saw a large increase in freight, shipping and labour costs which resulted in losses from retail operations. Amazon Web Services continues to perform strongly with 37% growth in revenue and 57% growth in operating profit. Given the retail losses however overall operating profit declined by 59% and the company also booked a non-cash loss on revaluation of their Rivian Automotive listed investment. This depressed earnings. Amazon has always been a company more focused on long term growth than short term earnings however these results were clearly more disappointing than had been anticipated.

For now at least, China continues to implement their zero-tolerance approach to COVID-19. This presents something of a challenge given the high rate of transmission of the Omicron variant. Regional lockdowns are hampering Chinese economic activity. These lockdowns have wider global implications as supply chains will come under further pressure.

Inflation is remaining elevated, monetary supply is reducing, supply chain issues are mounting due to Chinese lockdowns, and both growth and corporate profit expectations are slowing. Overall then the macro-outlook for risk assets, unless central banks change policies, for now remains challenging.