Market Update with Aled Phillips

September 2023


As ever, these articles are not a call to action but an explanation of the economic factors affecting your portfolios. These short-term movements are not relevant in the longer term, but important to know that the managers are navigating it effectively.

Despite the rally seen late on, August was the second weakest month of the year so far for global equities. Overall, in sterling terms, all asset classes produced negative returns despite a 3% gain for energy during the month. For the year to date, the returns are more positive with global equities up 10% and fixed income 2.3%. Commodities, however, were down 3%.

Regionally, China and Emerging Markets suffered most, down 7.6% and 3.5% respectively, while the best performing region was North America - down 0.3% on the month. In the UK, Europe, Japan and Emerging Markets, value stocks outperformed growth, whereas in North America, we witnessed the reverse. 


Central bank commentary reduces expectations of imminent interest rate cuts; UK hikes potentially still on horizon

Interest rate expectations for the major developed countries have largely moved to being on hold. In the US, with current interest rates at 5.375%, the next expected move is in March 2024 - where a 25bps cut is currently being priced in. In the Euro Area, current interest rates are at 3.75% and the next expected move is a 50bps cut in June 2024. 

Certainly, through the month of August, economic data in the Eurozone has deteriorated more than expected and there is a growing risk that it moves into a period of stagflation - where you witness slower growth, but with continued high inflation.

In the UK, the current interest rate is 5.25% and a further 25bps rise is priced in for the September meeting. Finally in Japan, where interest rates remain at a negative 0.10%, the first rise of 10bps is currently expected in Q3 2024.


China’s credit and growth concerns

China was a key driver of markets during August with both liquidity and growth concerns triggering more stimulus announcements. On the 6th of August, it was reported Country Garden Holdings (CGH) - China’s biggest private property developer by sales - missed two interest payments which increased default risk.  This triggered concerns around contagion, and later in August, Zhongrong Trust - the 9th largest trust company in China - delayed its payment of maturing wealth products. This further dampened sentiment. In addition, data from manufacturing, industrial production and retail sales still pointed to a slowdown in Chinese growth; whilst China also slid into deflation.

Given this pressure, China increased its stimulus, which started to gain traction towards the end of the month. This included policy rate cuts on three fronts, a nationwide housing policy relaxation for first-time homebuyers, 50% stamp duty cut on stock trades and the relaxing of margin financing rules. 


Final Q2 earnings reports

In August, we also saw the Q2 earnings wrapped up with 80%/59% of companies beating earnings per share (EPS) estimates in the US/ Europe respectively. Share price reaction saw companies that beat estimates appreciating less than the historical average, while companies that missed depreciated more than the historical average. This overall trend was also seen in Asia with 39% of reported companies beating consensus. The standout company was Nvidia, whose revenue came in over $13bn, significantly above the anticipated earnings estimate of $11bn, while the AI theme continues to power forward.

As always, if you have any questions at all about your investments or would like to discuss your financial plan, then please contact your adviser.



— Aled Phillips

Chartered Financial Planner & Commercial Director

Call: 01633 851805

Email: [email protected]

Office: 5 & 6 Waterside Court, Albany St, Newport, NP20 5NT


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Aled Phillips, Chartered Financial Planner & Commercial Director, was interviewed by Rhys Hicks.

The contents of this article do not constitute financial advice in any way; if you have any concerns about your finances you should talk to your financial adviser. The value of your investments can go down as well as up.


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Market Update with Aled Phillips
Aled Phillips 6 September 2023
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