2016 has been something of a mixed year when its comes to the performance of major assets.
Gold and oil have witnessed huge rallies since the chaos of the year's first few weeks, while equities in Asia have taken a beating as growth in China starts to slow down.
To illustrate the huge discrepancies in the performances of assets so far in 2016, Deutsche Bank has put together a handy chart showing how asset classes are doing right now, and explaining why that is.
Right at the top of the pile are iron ore, and equities in Brazil, while propping things up is Italy's stock market. Check out the chart below:
Deutsche Bank
It shows that Brazil's benchmark stock index, the Bovespa, has rallied since impeachment proceedings against president Dilma Rousseff began, while Italian stocks have been dragged by fears of weakness in the country's banks. Gold enjoyed its finest quarter in more than 30 years after investors fled to the metal during crazy volatility in markets at the start of the year.
Deutsche's chart is part of the bank's huge "House View" note, a comprehensive look at the bank's positions on everything from emerging markets to the US Fed's dovish outlook. Deutsche says that global markets and the macroeconomic picture are in "a delicate balance" thanks to sluggish global growth and dovish central banks.
Here's an extract from the bank's Group Chief Economist, David Folkerts-Landau (emphasis ours):
In the last month the global macro backdrop has improved. The manufacturing sector seems to have bottomed-out and data from China are stronger. Elsewhere, we expect eurozone growth to maintain its recent trend, US growth to pick-up after another weak first quarter, but EM growth to stay weak.
Dovish shifts by central banks earlier this year have supported economic growth and markets. This month, we do not expect any significant news from the ECB and Fed. We do not think the BoJ will ease again either, but this is where the biggest upside risk is. Beyond April, however, the path for the Fed, and how the difference between market pricing and Fed guidance is reconciled, are the main uncertainties.
This backdrop leaves markets in a delicate balance. The risk rally can extend further if economic data remain strong enough to ease growth concerns, but weak enough to keep the Fed on hold. But sentiment could reverse if the Fed is seen as closer to raising rates, or if, at the other extreme, growth stutters, oil sells-off, political risk escalates in Europe or China concerns re-emerge.