The S&P/ASX 200 fell 6.35 per cent in January according to S&P Dow Jones Indices with declines across most sectors and all major Australian indices.
After a return of 2.75 per cent in December and 17.23 per cent for 2021 overall, the negative start to 2022 was particularly driven by falls in the financials sector.
“Eight out of 11 Australian sectors contributed negatively to January returns, with financials being the largest detractor, responsible for close to a third of the S&P/ASX 200’s decline for the month,” said S&P Dow Jones Indices director of index investment strategy Benedek Voros.
Financials were down 6.53 per cent for the month while the information technology sector recorded the largest individual fall with a decline of 18.43 per cent.
A drop of 12.13 per cent for the health care sector saw it rank as the second worst performer, while declines exceeded the broader index in consumer staples (-9.59 per cent), real estate (-9.53 per cent), consumer discretionary (-8.69 per cent), communication services (-8.02 per cent) and industrials (-7.59 per cent).
“Commodity-related energy and materials, and utilities advanced, but their combined 0.4% contribution was only enough to limit the benchmark’s losses for the month,” Mr Voros said.
The energy sector was up 7.88 per cent for the month, followed by a 2.56 per cent uplift for utilities and a slight uptick of 0.79 per cent for materials.
The biggest fall among the major Australian indices was seen for the S&P/ASX Small Ordinaries index, which fell 9.00 per cent, followed by drops of 8.68 per cent for the S&P/ASX MidCap 50 index and 7.67 per cent for S&P/ASX Emerging Companies.
Meanwhile, the S&P/ASX 20 (-5.22 per cent), S&P/ASX 50 (-5.57 per cent) and S&P/ASX 100 (-6.07 per cent) all slightly outperformed the S&P/ASX 200.
Turning to fixed income, Mr Voros noted that Australian bonds were sold off during the month with a 1 per cent decline for the broad-based S&P/ASX Fixed Interest index.
“Inflation-linked bonds were not spared from the sell-off, declining by 1 per cent in Australia and 2 per cent in New Zealand, potentially signalling that demand for inflation protection may be waning on the back of increased hawkishness from the two countries’ central banks,” he said.
