Market commentary – Summary Q3 2023


In Q3 2023, global equities saw a negative return after strong gains in the first half of the year. Government bonds also declined as yields rose. Commodities performed well, particularly energy due to oil production cuts by Saudi Arabia and Russia.

In the US, equities weakened as concerns grew about sustained higher interest rates. The labour market remained strong, but unemployment slightly increased, and the composite purchasing manager’s index (PMI) showed economic cooling. Inflation ticked up but was on a downward trend. Energy stocks were resilient, but the IT sector was weak.

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Eurozone shares fell due to worries about the impact of interest rate rises on economic growth, though inflation slowed. Consumer discretionary and IT sectors were notably affected, but energy and financials performed well.

UK equities rose, driven by energy and basic materials groups rebounding, benefiting from a strong dollar and higher crude oil prices. Domestically focused areas of the market also recovered.

In Japan, the market saw resilience despite a correction, with value stocks performing better than growth stocks. Quarterly earnings results were solid, and the Bank of Japan made policy adjustments.

In Asia (ex Japan), equities declined, mainly due to concerns over the Chinese economy and global economic growth. Hong Kong, Taiwan, and South Korea were the weakest markets, while Malaysia and India saw growth.

In emerging markets, concerns about the US economy keeping interest rates higher and ongoing weakness in the Chinese economy affected risk appetite. Poland and Chile posted significant declines.

In global bonds, concerns over rising US debt issuance impacted the Treasury market. Global government bond yields rose, led by the US. Corporate bond markets outperformed government bonds.

Commodities saw a sharp rise, driven by significantly higher energy prices after oil production cuts by Russia and Saudi Arabia.

In conclusion, the third quarter of 2023 witnessed a shift in the financial landscape. Global equities experienced a setback after a strong start to the year, partly due to concerns about rising interest rates and their potential impact on economic growth. Energy and commodities stood out as notable performers, particularly due to oil production cuts.

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