What’s happened in markets?

FTSE All Share 1.86 3.11 0.85 6.24 4.68 13.89 5.03
Euro Stoxx 50 1.91 5.43 6.37 16.51 18.40 18.04 8.35
S&P 500 0.82 5.70 3.91 8.29 -4.20 15.09 11.18
Japan Topix 2.71 4.75 7.24 7.88 8.51 14.76 5.63
MSCI Asia Pac. 0.85 5.84 -2.70 4.91 -5.95 5.68 0.28
MSCI Emerg. Mkts. 1.39 6.18 -2.39 5.14 -7.54 6.58 -0.35
Jo’burg All Shares 2.40 6.40 0.77 9.48 12.13 21.23 10.96
UK Gov’t Bonds -1.97 -0.58 -1.47 1.00 -14.81 -9.87 -3.06
US Gov’t Bonds -1.23 1.09 0.63 2.92 -2.16 -4.19 0.80
Global Corp. Bonds -0.44 1.68 0.32 3.27 -2.23 -1.38 1.48
Emerg. Mkt. Local 0.56 3.26 0.81 5.51 1.20 0.55 -0.98
Figures in the respective local currencies as at the end of trading on 14/4/2023.

In the US, headline inflation fell to its lowest since May 2021 as the consumer price index (CPI) for March rose by only 0.1%, coming in below expectations at 5% year on year. This was put down to lower energy prices and a decline in the housing component, as monthly rental inflation fell to a one-year low. However, the core CPI (which excludes more volatile food and energy) remained resilient and in line with expectations up 0.4% to 5.6% year on year, suggesting prices for some goods and services are still stubbornly high. Although there was more encouraging news on inflation on the business side as both the headline and core producer price index (PPI) surprised by coming in below expectations at 2.7% (against 3.0% expected) and 3.6% (against 3.8%) respectively. The March jobs report showed US jobs growth slowed in March but remains tight. Weekly initial jobless claims came in above expectations at 239,000, rising for the first time in three weeks. Minutes published from the Fed’s March meeting showed that policymakers had lowered their expectations for rate hikes this year following the recent banking turmoil. They also predicted a mild recession later in 2023.

In the UK, monthly gross domestic product (GDP) growth came in below expectations, remaining flat in February as industrial action continued to weigh on public services. This followed a revised figure of 0.4% growth for January, which means the UK economy has finally risen above its pre-pandemic levels.

In the eurozone, seasonally adjusted industrial production was stronger than expected, up 1.5% in February and 2.0% year on year.

On the corporate front, JPMorgan Chase, Citigroup and Wells Fargo all reported better than expected quarterly earnings results – helped by higher interest rates and clients moving deposits from smaller, regional banks following last month’s collapse of Silicon Valley Bank and Signature Bank. Though they warned of ‘storm clouds’ remaining for the year ahead as all increased their provision for loan losses.

In other news, the IMF warned of a ‘hard landing’ for the global economy if inflation persists and keeps interest rates higher for longer. It called on central banks and governments to keep working to bring inflation down.

It was a positive week in markets as softer than expected inflation meant investors dialled back their expectations for Fed rate increases, which was encouraging for risk sentiment. Equities performed well over the last 30 days with developed markets (+7.3%) outperforming emerging markets (+6.0%). In terms of style, the more interest rate sensitive growth (+7.7%) continued to outperform value (+6.8%), while large capitalisation stocks (+7.5%) led small caps (+4.8%) over the same period. Energy (+13.2%) was the best performing sector over the last 30 days while real estate (+1.0%) was the worst.

In fixed income, falling US yields over this year have translated to better returns for longer dated government bonds.

Another asset class that benefited from the prospect of a pause in the Fed’s rate hikes was gold which climbed to its highest level in a year. Oil (+22.3%) also continued its upward trend, particularly following the decision of the OPEC+ group to cut output.

In terms of currencies, the euro was particularly strong against the US dollar and closed above US$1.10 for the first time since April 2022 on the back of growing expectations that the European Central Bank might pursue another 50 basis point hike at its next meeting in May.

Latest Consensus


UK GDP (QoQ) 0.1
UK PMI 52.2 52.2
UK CPI (YoY) 10.4 9.8
EU GDP (QoQ) 0.0
EU PMI 53.7 53.7
EU CPI (YoY) 6.9 6.9
US GDP (QoQ) 2.6 2.0
US PMI 51.2
US CPI (YoY) 5.0

What’s happened in portfolios?

We have seen pleasing performance among our equity managers as a result of our longer duration positioning in quality growth stocks. Fundsmith Equity, which has the strongest growth bias, stood out, while Morgan Stanley Global Brands and Veritas Global Focus also outperformed due to their quality bias. Dodge & Cox Global Stock kept pace, despite its value style, thanks to holdings in communication services.

In fixed income, the continued fall in yields has benefited our longer dated funds both in the investment grade and government bonds space so far this month.

We continue to like real assets and one area that has been really strong for us in 2022 and also longer term is renewable energy. Greencoat UK Wind (UKW) has been a consistent performer and announced its latest acquisition of a 42MW wind farm in Scotland for £50 million, boosting generation capacity further. This new asset benefits from a 10-year fixed price power purchase agreement  (PPA) with BT for 80% of its output.

In our alternative strategies, Gresham House Energy Storage (GRID) published its full year results for 2022. Net asset value (NAV) total return was up a significant 39% and dividend cover is a very positive 1.3 times. The fund has also increased transparency for investors on revenue assumptions and leverage which was well received by the market.

What’s happening this week?

19 April • EU Consumer Price Index (Mar) | 19 April • UK Consumer Price Index (Mar) | 20 April • US Initial Jobless Claims