Market Update with Aled Phillips

With a turbulent 2022 behind us, the first quarter of 2023 proved equally dynamic, with several newsworthy events testing global markets. Commercial Director and Chartered Financial Planner, Aled Phillips, has taken a look at the key market movements to be aware of:

After another eventful quarter, we witnessed positive returns in both stock and bond markets, resulting in positive portfolio performance and, as I type, the FTSE 100 is at 7,882.97 and not far off its all-time high.

The quarter started on a positive note, with earnings in January surprising on the upside and this was followed up in early February by data showing the resilience of the global economy.  Unemployment levels remained low; PMI data indicated business confidence; whilst consumer spending data continued to signal confidence in the economy. 

Later in February and into early March, the banking sector came under pressure before actions by central banks helped calm markets. Warren Buffet was quoted in the media last week, saying that while there remains a chance of more US banks failing, depositors will be protected by central banks, as was the case with SVB.

Economic data is also not as clear, as seasonal adjusted numbers are still skewed from Covid and this has led to hard data, such as employment data, and soft data, such as expectations of consumers and businesses, providing different outlooks.  

Market action for the second quarter is still going to be focused on central bank actions, with expectations of further hikes feeding through during the first half of the year, for example, another 25bps rise in the US in May is being priced in. 

Leading into the end of the year, there are growing expectations that areas such as the US could look to cut rates.  Whether this feeds through will be determined on whether higher interest rates and the tighter financial conditions start to slow the economy faster than expected.

As ever, this information is sent to help put media reports into context and explain what is affecting portfolio performance. If you have any queries or would like to discuss your financial plan, then please contact your adviser.