Volatility in global markets continued to be a theme over the month, with significant swings seen on a daily basis. Whilst market sentiment was relatively upbeat at the start of the month, it fell away significantly as the month drew to a close, as investors were spooked by the emergence of the highly transmissible Omicron variant. Speculation about vaccine efficacy against Omicron fuelled fears of more lockdowns, with some countries in Europe already starting to impose new restrictions on the back of escalating case numbers heading into winter. To top off the negative news, on the last day of the month Fed chair Powell signalled tapering may be accelerated, as inflation is less transitory than first thought. This double whammy was a headwind for risk assets and flattened yield curves, resulting in downward pricing pressure on companies with longer dated earnings profiles. Within the domestic market, small caps marginally outperformed the broader market, closing down -0.3% against the ASX200 Accumulation Index which fell -0.5%.
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