The first quarter of 2023 saw mixed performance across global markets, with different regions experiencing varying degrees of economic growth and market volatility, particularly as a result of the Silicon Valley Bank collapse, with a handful of other small regional US banks going the same way. Moreover, Credit Suisse, a troubled lender, was acquired by UBS at a significant discount to market value, which may have helped to contain the effects on the wider market.
UK equities performed well over the quarter, with economically sensitive areas such as industrials and consumer discretionary sectors outperforming other markets. This was due to hopes that central banks may cut interest rates in late 2023. Despite earlier expectations of a Q4 2022 contraction, the UK economy avoided a technical recession. The BoE’s Monetary Policy Committee voted to continue raising interest rates to combat inflation, which was higher than expected due to the resilience of the domestic economy.
In US markets, Despite the brief market volatility that occurred after Silicon Valley Bank failed in March, investors remained optimistic and pushed US stocks higher during the quarter. The Federal Reserve implemented two rate hikes, and evidence suggested that inflation was slowing down. This is creating the opinion for some, that rate increases may end in the coming quarters.
Across global markets, equities delivered strong returns in the first quarter, buoyed by improving economic data and accommodative monetary policies. Bond markets were more mixed, with rising interest rates leading to negative returns for some fixed income investments.
Looking ahead, the economic outlook for the rest of the year remains uncertain due to the continuing Geopolitical turmoil, however, with market prices at the level they are, there is also a strong potential for opportunities in global growth and market performance.
Things to consider
Are your pensions and investments prepared for the uncertainty that may be ahead? As global markets continue to fluctuate, it’s essential to have a financial plan in place. As Independent Financial Advisers, we at SN Financial Services can help navigate these uncertain times and assist in putting together a strategy based on how you can achieve your financial goals. Contact us today to schedule a free initial consultation and get started on securing your financial future.