Monthly Market Commentaries

July was a positive month for global equities. In contrast to the year to date, emerging markets outperformed developed market equities, as Chinese authorities pledged measures to boost and support the economy. Domestic based (smaller) companies also tended to perform well in their respective indices. Equity gains were further supported by the surprisingly lower inflation readings in several developed markets, including the US and the UK.

Global equities gained in Q2 2023, with the advances led by developed markets, notably the US, where investor enthusiasm for Artificial Intelligence (AI) boosted the technology sector. However, emerging markets lagged behind.

Major central banks raised interest rates during Q2 2023, although the US Federal Reserve elected to “pause” their rises in June. Government bond yields therefore rose, and consequently prices fell.

There was a mixture of returns within equity markets as positive investor sentiment for Artificial Intelligence (AI) stocks and robust survey data from the service sector boosted US, Japanese and some Asian indices. However, disappointing manufacturing survey data and falling commodity prices saw indices fall in the UK, Europe, China and Emerging Markets. Market volatility caused by the US debt ceiling negotiations subsided after it was clear a deal would be struck. Government bond yields continue to rise, which meant prices fell.

On the whole, global equities rose in April, supported by some resilient economic data. Chinese equities were a drag on the Emerging Market sector, which subsequently underperformed developed market equities. US bonds generated positive capital returns as yields fell, but in other bond markets price fell as yields rose.

All major global equity indices gained in Q1 2023. Equities were supported by receding recession worries in developed markets and the positive returns came despite the collapse of Silicon Valley Bank (SVB), which caused significant volatility in global bank shares and fears of a new banking crisis. However, Central Banks moved quickly to allay such fears and reassure investors. Over Q1 2023, bond yields fell meaning that prices rose.

After the strong returns in January, global equities declined in February. Investors became concerned that the resilient economic data published during the month will mean that interest rates will continue to rise for the foreseeable future. The US Federal Reserve (US Fed), European Central Bank (ECB) and Bank of England (BoE) all raised interest rates in the month, which lead to bond yields rising and prices falling.