1st Quarter Market Update

I hope that this update finds you well and looking forward to an Easter Bank Holiday. 

Reflecting on the first Quarter of 2023 it once more has shown how quickly markets can turn. 

The initial optimism of the year started quite brightly but with rising bank rates we saw pressure on the US banking sector. 

Silicon Valley Bank (SVB) is not our first thought here in the UK of a US bank but there are over 4,000 banking providers in the US. 

This did create a focus on the banking sector and there have been some issues on smaller more regional banks. This did bleed into Europe with most being placed under the spotlight. 

The biggest casualty in Europe is Credit Suisse who have now taken over by UBS. The issues at Credit Suisse are not new and this has been at boiling point for some time. 

This sector has seen some issues and there have been some ripples as to be expected but 2008 it is not. 

We have seen commodity prices cool in this quarter with only oil rising toward the end as OPEC+ reduced supply, in the main part to drive up the price. This has seen a short-term price increase, but the prices at the pump, appear to keep falling. 

As we have done in the past looking toward the popular market metrics, I have set these out below for the first 3 months of this year. 

FTSE100                                            2.19%                                    

MSCI World                                      4.81%

S&P 500                                            7.01%

0-35% Mixed Investment              1.27%

20-60% Mixed Investment            1.20%

40-85% Mixed Investment            1.75%

Its pleasing to see profit dare I say across all and interestingly the FTSE100 saw its highest point of value but that has now fallen away. Given this is a very commodity, financial and energy heavy index. 

The UK is now only 4% of the world market and it has shown already this year that our glass ceiling of UK bias in investing can only take us so far. 

The far east is looking brighter so as the world drags itself to recovery once more our eyes will be drawn there. 

The great central bank rate “pivot” is yet to be seen and the slowing of increases on central rates has been noted and the markets have reacted to this in a positive way. 

In a strange way the banking issues in the US may well have saved the US Fed the headache of knowing when to pivot and stop or even reduce rates. 

On the financial bingo for 2023 nobody had a bank run and a US pivot because of this alone. 

However, this might well be the case, as inflation does keep turning, but at much slower pace than any central bank wants to see. 

Our own inflation here has moved up a little recently seeing as there was some food supply pressures, but as the weather gets better and supply catches up, this will also turn a touch quicker. 

As commodities and energy cool, we have seen technology have a very strong bounce back in the first quarter. 

The example here is the IA Sector Technology and Technology Innovations has seen a growth of 15.24% against IA Sector Commodity and Natural Resources -2.65%.

The question is now have we seen peak rates and inflation and have the markets priced this in correctly. 

There could be one more increase as this is already priced into the UK markets and if the expected fall in inflation does come then this will also provide a catalyst for a quick change. 

With us now in the new tax year, please ensure you have looked back to our budget breakdown that was sent to you on the 17/03 for the full details on the new tax years allowances and limits. 

As always if you required any help or assistance in anyway, please do not hesitate to get in touch.