The optimism with which markets started the year showed signs of waning today, with European stock indexes mixed following a weaker Asian session that saw higher US Treasury yields hurt technology stocks.
With investors expecting the Federal Reserve to begin hiking interest rates as early as March, US Treasury yields jumped on Monday and Tuesday.
But today they pulled back slightly.
The shift in market focus back to prospects for US rate hikes has revived a rotation out of growth-sensitive stocks, such as tech firms, into ones that offer income, such as financials and industrials.
After the tech-heavy Nasdaq fell 1.3% in Wall Street on Tuesday, Asian shares fell overnight.
Speaking on Morning Ireland, Paul Sommerville of Sommerville Advisory Markets said the stock markets did very well last year.
"It is all driven by liquidity, and all the Central Banks flooding the market with a tsunami of liquidity - pushing stock prices and house prices higher, commodity prices like oil were up 50% last year," he said.
Mr Sommerville said what we are coming into this year is a bit different.
"We are going to see a bit more volatility, because we know the Central Banks have changed their tune.
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"At the start of last year they said they weren't going to put up interest rates because inflation was transitory, now they're saying it is going to be more persistent and they need to put up interest rates, so what you saw yesterday was price action that was very interesting because the Nasdaq which is the tech heavy stocks fell yesterday, while the S&P and the travel stocks did very well because that is what you would expect in an inflationary environment - the energy and bank stocks do well, while the high value tech stocks that have been doing well performed poorly yesterday and it is something for investors to watch out for all this year," he said.
While investors are gearing up for a rate hike from the US federal reserve, the European Central Bank has said it won't put up in interest rates.
"That is why we would favour European stocks this year, we think they have got a lot more to go," said Mr Sommerville.
"But the market is perceiving that the Federal Reserve will put up interest rates at least three times this year, so a bit more choppy and we can see that in the price of the ten year Government bonds - it is very important to watch that this year.
"It has moved from about 1.35% in early December to about 1.65% yesterday, and the same with the 30 year, so something for investors to watch because when those bond yields move it brings volatility and it brings a strange environment for some investors because some stocks will do very well, while other stocks we would expect to falter," he said.
Investors should also keep an eye on Chinese house prices throughout 2022, Mr Sommerville said.
"It is not being talked about a lot but the Chinese economy is slowing down, probably be below 5% growth rate and they are trying to stimulate the economy so I think everything about China is one for investors to watch - if that falters then the stock markets could have a bit of a wobble."
Additional reporting from Reuters