Last week, all major equity markets delivered positive returns, with China and Japan outperforming and Europe lagging. US equities also delivered strong results, with tech and small-caps being the best performers.

In the US and European fixed income markets, yields increased considerably across maturity as well as quality spectrums (1 and 2 year treasuries are now offering 4.9% and 4.5%, respectively). The reason underlying last week’s dynamics were somewhat hawkish statements from the European Central Bank and the US Fed representatives.

Looking ahead, investors may benefit considerably from investing in diverse equity market segments. While the US-based large-cap companies have generally rallied during the past year, some areas have failed to keep up. In contrast to S&P 500, European large-caps and US small-caps have gained mere 5.3% and 0.6%, respectively in past year. Moreover, most of the S&P 500 companies have also been underperforming the Magnificent 7, as illustrated by a modest 4.1% yearly gain of equally weighted S&P 500 index.