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A Strong Start to 2017 for Global Markets in 6 Charts

In both local-currency and U.S.-dollar terms, most global markets had a good start to the year.

The first quarter of 2017 was a strong one for global equity markets, reflecting continued investor optimism and a welcome contrast to the nervous start of 2016.

The Morningstar Global Markets Barometer shows that only five of Morningstar's 45 country indexes were down for the quarter in local currency terms, and all are small markets: Russia, Israel, Hungary, Greece, and Peru.

Viewed in U.S. dollar terms, only three out of 45 countries were in the red.

Narrowing the focus, the Morningstar U.S. Market Barometer shows that while the overall market gained roughly 6%, continuing a post-election rally, returns diverged across the Morningstar Style Box. Large-cap stocks generally topped small, while growth led value. This was a reversal from 2016, when the lower left (small value) dominated.

The U.S. Market Map shows that technology was the best-performing sector powered by

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Higher-quality stocks, represented by the Morningstar Wide Moat Index, led the market. Meanwhile, lower-quality stocks, as represented by the Morningstar No Moat Index, lagged the market by more than 200 basis points.

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Despite the Federal Reserve’s move to hike the federal funds rate in March, the bond market posted a strong first quarter. The broad Morningstar Core Bond Index gained 0.85% for the quarter, while the Morningstar Corporate Bond Index gained even more, reflecting improving credit dynamics and optimism around business activity. The first quarter’s strongest-performing bond index was emerging markets, signaling confidence in global growth.

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About the Author

Dan Lefkovitz

Strategist
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Dan Lefkovitz is strategist for Morningstar Indexes, responsible for producing research supporting Morningstar’s index capabilities across a range of asset classes. He contributes to the Morningstar Direct℠ Research Portal, authors white papers, and frequently hosts webinars on index-related topics.

Before assuming his current role in 2015, he spent 11 years on Morningstar’s manager research team. He held several different roles, including analyst and director of the company’s institutional research service. From 2008 to 2012, he was based in London, helping to build Morningstar’s fund research capability across Europe and Asia. Lefkovitz also participated in the development of the Morningstar Analyst Rating™, the Global Fund Report, and edited the Fidelity Fund Family report from 2006 to 2008.

Before joining Morningstar in 2004, Lefkovitz served as director of risk analysis for Marvin Zonis + Associates, a Chicago-based consultancy. During this time, he coauthored The Kimchi Matters: Global Business and Local Politics in a Crisis-Driven World (Agate, 2003).

Lefkovitz holds a bachelor's degree from the University of Michigan and a master's degree from the University of Chicago.

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