In global equities, the MSCI World rose as much as 5.2% from the start of the year to reach its record high on 15 February 2021, on prospects of a stronger economic rebound in advanced economies. Gains, however, were tempered slightly by the end Q1 2021 to close the period 4.5% quarter-on-quarter (q-o-q) higher (Q4 2020: 13.6%) given concerns of potential overheating of the US economy, and the resurgence of global COVID-19 numbers. Likewise, the MSCI Emerging Markets initially rallied by 11.9% on 17 February 2021 from beginning of 2021, but ended the period by a marginal 1.9% q-o-q increase in Q1 2021 (Q4 2020: 19.3%). Advances in the emerging markets were limited as sentiments wavered slightly amid mounting virus cases and sporadic vaccine distribution in the region. In the US, the S&P 500 index rose by 5.8% q-o-q in Q1 2021 (Q4 2020: 11.7%), with gains mostly anchored by the technology sector and sectors benefitting from reopening of the economy. Similarly, the Euro Stoxx 50 ended the quarter higher by 10.3% q-o-q (Q4 2020: 11.2%) amid brightened global growth outlook, eclipsing worries of surging COVID-19 infections and several fresh lockdowns in Europe. Additionally, the UK FTSE 100 rose 3.9% q-o-q (Q4 2020: 10.1%) despite persistent EU-UK tension. In Asia, the Nikkei 225 rose 6.3% q-o-q in Q1 2021 (Q4 2020: 18.4%).

Meanwhile, the global bond market experienced losses during the quarter, with bond yields climbing to prepandemic levels on concerns that a sharp US economic recovery, induced by large fiscal stimulus could potentially reignite inflation. On the monetary policy front, the US Federal Reserve (Fed) in its Federal Open Market Committee (FOMC) meeting on 16 and 17 March 2021 pledged that it would keep rates near zero at least through 2023, while maintaining the current pace of its asset purchases programme. Other major central banks such as the European Central Bank (ECB), Bank of England (BOE) and Bank of Japan (BOJ) also reiterated their commitments to retain an accommodative interest rate environment. The US Treasury 10-year (UST 10Y) yields increased by 83.4 bps q-o-q to 1.75%, the highest since January 2020 (Q4 2020: 23.5 bps). Tracking the UST 10Y yields momentum, the German bund 10-year yields rose by 27.8 bps q-o-q to -0.30% (Q4: -5.5 bps), while the UK Gilt 10-year yields added 64.9 bps q-o-q to 0.85% in Q1 2020 (Q4 2020: -3.5 bps). In Asia, Japan 10- year government bond yields rose modestly in comparison to other major markets, by 7.4 bps q-o-q to 0.10% (Q4 2020: 0.5 bps), given the central bank’s yield curve controls. Likewise, the EM sovereign bond yields ended mostly higher during the quarter.