The second quarter of 2015 was a mixture of calm and frenzy in financial markets. Few asset classes moved dramatically over the course of the quarter, but there were pockets of volatility overseas that drew headlines and put investors on edge. Here are four graphs that explain the key movements in financial markets during the past three months.
1. Rising bond yields
Bond yields rose as investors prepared for the Federal Reserve to start raising interest rates. The yield on 10-year treasury bonds increased from 1.9% at the start of April to 2.3% by the end of June. The result was negative returns for investment grade bonds.
2. Greece’s descent into crisis
After a failure to reach an agreement with its European creditors to extend its bailout, Greece now faces a financial crisis. Greek stocks tanked, but for the entire quarter they were down by less than 10%. That’s partly because they had already fallen so far earlier in the year after the country’s January election and again after a temporary bailout extension was reached in February. Greek stocks fell a total of about 25% in the first half of 2015.
3. Chinese stock market volatility
China’s stock market surged and showed many of the classic signs of a bubble, then plunged in the second half of June. The above graph shows how the up and down movements of the Chinese stock market became larger compared with previous quarters. The shares of Chinese companies listed in Hong Kong, which is how American investors typically access the Chinese market, were less volatile than stocks listed in mainland China.
4. Utilities sector struggles
As investors prepared for a possible end to the long period of near-zero interest rates, many stocks with high dividend yields—such as stocks in the utilities sector—underperformed the broader market. The performance of utilities stocks trailed the overall return of the US stock market by 6 percentage points, and utilities were the worst-performing sector for the second straight quarter.