What’s happened in markets?

FTSE All Share 0.89 -5.56 -0.12 0.07 0.61 14.52 4.73
Euro Stoxx 50 1.79 -0.96 8.76 9.44 10.93 18.48 8.01
S&P 500 1.41 0.19 3.73 3.85 -10.66 19.39 10.84
Japan Topix -0.21 -1.63 3.25 3.41 1.35 16.38 5.75
MSCI Asia Pac. 2.16 0.94 3.47 2.78 -9.86 8.89 0.09
MSCI Emerg. Mkts. 2.23 0.27 2.35 2.00 -11.63 9.58 -0.96
Jo’burg All Shares 3.15 -2.31 2.35 2.98 4.68 26.86 9.79
UK Gov’t Bonds -0.09 3.92 3.27 3.55 -14.70 -8.72 -2.65
US Gov’t Bonds 0.36 3.75 2.99 3.57 -3.90 -3.85 0.95
Global Corp. Bonds 0.70 2.23 2.60 3.19 -4.38 0.98 1.57
Emerg. Mkt. Local 1.69 2.41 3.42 3.69 -1.31 1.75 -1.29
Figures in the respective local currencies as at the end of trading on 24/3/2023.

In the US, weekly initial jobless claims fell to a three-week low of 191,000, pointing to continued strength in the labour market. The Federal Reserve (Fed) hiked rates by 0.25% but signalled it could be close to winding down its monetary tightening campaign to rein in high inflation. Following the recent turmoil in the banking sector, the Fed put out a statement saying the US banking system was “sound and resilient” but there was still uncertainty on the impact the fallout would have on the economy.

In the UK, annual inflation jumped unexpectedly with consumer prices rising by 10.4% in February, above the 9.9% anticipated. The following day, the Bank of England (BoE) responded with its eleventh consecutive increase in rates, up by 0.25% to 4.25%, despite the recent upheavals in the banking sector. Seven of the nine Monetary Policy Committee’s members voted for the rate increase, while two voted to pause. Minutes from the meeting stated that the UK banking system remains resilient and well placed to continue supporting the economy, including in a period of high interest rates.

In the eurozone, economic growth accelerated according to the S&P Global composite purchasing managers’ index (PMI) which rose to a ten-month high of 54.1 in March. A reading above 50 indicates expansion in activity. However, this was driven primarily by strong growth in the services sector, while manufacturing continued to lag.

In other news, the Swiss National Bank hiked interest rates by 0.50% despite the demise of Credit Suisse last week. In Japan, consumer price inflation (up 3.3% year on year) slowed in line with forecasts for the first time in 13 months, mainly due to the effect of the government’s energy subsidy programme.

In corporate news, the crypto exchange platform Coinbase plunged 14% after it disclosed that it had received a warning notice from the US Securities and Exchange Commission (SEC). Even with this decline, the stock is up 87% this year amid a rebound in crypto prices, but this followed a slump of 86% last year. The US is moving towards more regulation of the highly volatile cryptocurrency market.

In other news, China’s leader Xi Jinping met Russian president Vladimir Putin for a three-day state visit which ended with Xi saying they were driving geopolitical change around the world, but there was no meaningful progress on peace talks for Ukraine.

In terms of markets, there was risk off in certain areas while the broader market was more positive. The risk off sentiment meant cyclical value areas underperformed, with financials still under pressure as liquidity concerns over the smaller US banks continued to permeate. Emerging markets (-0.8%) performed slightly better than developed market equites (-1.21%) over the last 30 days. In terms of style, value (-4.7%) continued to underperform growth (+2.5%), while large-caps (-0.4%) outperformed small-caps (-5.5%) over the same period. Technology stocks benefited from a lower interest rate outlook with information technology (+6.0%) the best performer, closely followed by communication services (+5.3%). The more defensive consumer staples (+0.4%) was also in positive territory. Unsurprisingly, financials (-9.7%) was the worst performer, while real estate (-6.8%) and energy (-6.3%) also lagged.

In fixed income, expectations of lower interest rates led to a widening of credit spreads and falling yields which was supportive of government bonds. Long duration government bonds (+3.7%) outperformed short duration (+1.4%) and high yield bonds (-0.3%) over the last 30 days.

Recessionary fears and the falling bond yields supported gold (+8.2%), while oil (-6.3%) which is a more cyclical commodity fell over the last 30 days.

Latest Consensus


UK GDP (QoQ) 0.0 0.0
UK PMI 52.2
UK CPI (YoY) 10.4
EU GDP (QoQ) 0.0
EU PMI 54.1
EU CPI (YoY) 8.5
US GDP (QoQ) 2.7 2.7
US PMI 55.1 54.5
US CPI (YoY) 6.0

What’s happened in portfolios?

Within equities, the risk off environment has meant our defensive, quality managers Fundsmith Equity and Morgan Stanley Global Brands outperformed and generated a positive return this month due to their overweight to technology stocks. On the other end of the spectrum, our value manager Dodge & Cox Global Stock Fund has underperformed given its cyclicality and bias to European banks. Although we have more than halved our position here since the middle of last year as we factor in prevailing economic risks.

In fixed income, the fall in yields has meant our longer dated funds both in investment grade and government bonds have outperformed our shorter dated ones. Also, the widening in spreads has added further support to government bonds.

Within our alternative strategies, Princess Private Equity reported a fall in net asset value, down 4.2% from a year ago, as a result of high inflation and aggressive interest rate hikes.

However, our real assets performed better as our holding in gold through Wisdom Tree Core Physical Gold ETC has done well given the recessionary fears. It has behaved as it should in times of market stress as a safe haven quality asset.

What’s happening this week?

31 March • US Core PCE Price Index | 31 March • UK GDP Growth Rate | 31 March • EU Unemployment Rate