The week in review

The week of 23 January 2023 saw mixed, but marginally better, economic data. Equities continued their positive run as inflation appears to be cooling and investors hope for signs of a softer landing in 2023.
Published 31 January
4½ mins

What’s happened in markets?

FTSE All Share0.214.3710.544.584.204.453.86
Euro Stoxx 501.469.1916.6510.323.487.426.09
S&P 5002.486.427.396.11-4.369.619.11
Japan Topix2.903.964.224.8110.517.763.50
MSCI Asia Pac.1.5710.1828.7010.57-7.162.12-0.08
MSCI Emerg. Mkts.1.449.6622.799.96-9.011.07-1.08
Jo’burg All Shares1.9410.0220.7110.6915.3517.599.56
UK Gov’t Bonds0.042.330.972.61-19.60-8.23-2.58
US Gov’t Bonds-0.042.363.802.33-8.67-2.500.60
Global Corp. Bonds0.213.256.713.37-9.04-2.151.31
Emerg. Mkt. Local0.555.4914.445.25-4.86-3.03-1.23
Figures in the respective local currencies as at the end of trading on 27/1/2023.

In the US, the S&P Global composite purchasing managers’ index (PMI), which measures activity in the services and manufacturing sectors, came in at 46.6 for January, up from 45.0 in December but still below the 50.0 level, which indicates private sector contraction. However, according to the gross domestic product (GDP) reading, the US economy expanded at an annualised rate of 2.9% in Q4, better than the consensus expectation of 2.6%. 


Inflation data came in the form of the personal consumption expenditures (PCE) index, which is the Fed’s preferred inflation measure. The core index (which excludes more volatile food and energy prices) came in at 4.4% for the year ending in December 2022, down from its peak of 5.4% in February 2022. The US jobs market remained resilient as initial jobless claims came in lower than expected again at 186,000, a decrease of 6,000 from the previous week’s revised level. It was a quiet week for central banks with the Federal Reserve (Fed) in the blackout period prior to its two-day policy meeting on 31 January and 1 February.

In Europe, business activity in January stabilised after six successive months of decline. The early reading of the composite PMI from S&P Global rose to 50.2 (up from 49.3 in December) and just above 50, indicating the first marginal expansion of activity since June 2022. Although European Central Bank policymakers remained hawkish and repeated their calls for “significant” rate increases as inflation is still too high.

In the UK, business activity dropped at its sharpest rate for two years, particularly in the services sector. The composite PMI from S&P Global came in at 47.8, down from 49.0 in December. However, business confidence for the year ahead improved in January, on hopes of a better global economic outlook and lower inflationary pressures.

The Bank of Canada continued its policy of quantitative tightening and hiked its policy interest rate by 25 basis points to 4.50% on 25 January. The accompanying statement said the Governing Council expects to hold the policy rate at its current level while it assesses the impact.

In corporate news, Microsoft reported better than expected earnings but disappointed the market with its revenue forecast for its cloud services. Tesla stocks soared 11% on Thursday 26 January, following a strong Q4 earnings report and a bullish statement from CEO Elon Musk on his plans for rapidly boosting output.

In other news, there was a heating  up of the conflict in Ukraine as both the US and Germany agreed to supply tanks to help push back the Russian offensive. However, these latest weapons are expected to take several months to arrive.

In terms of markets, the positive performance seen since the start of the year continued throughout January, despite fears of recession looming. Developed market equites (+6.9%) are catching up on emerging markets (+9.9%), but growth (+9.8%) continued to outperform value (+4.9%) over the last 30 days. Small capitalisation stocks (+8.1%) beat large capitalisation stocks (+7.2%) over the same period. Although, in terms of equity style, it is value that is just in positive territory over the 12 month timeframe. Communication services (+14.8%) remained the best performing sector for another week, with consumer discretionary (+13.6%) also strong. While the more defensive sectors, consumer staples (-0.3%), healthcare (+0.3%) and utilities (+0.4%) lagged. Within fixed income markets, yields remained steady over the last week, partly due to the blackout period before the Fed’s next interest rate decision on Wednesday 1 February.

The US dollar also remained reasonably steady against other major currencies over the week.




UK GDP (QoQ)-0.3
UK PMI47.847.8
UK CPI (YoY)10.5
EU GDP (QoQ)0.3-0.1
EU PMI50.250.2
EU CPI (YoY)9.2
US GDP (QoQ)2.9
US PMI49.250.5
US CPI (YoY)6.5

What’s happened in portfolios?

In equities, the risk-on environment has meant our more cyclical Dodge & Cox Global Stock Fund has been able to outperform the MSCI All Country World Index (ACWI) over the month. Its value focus and, in particular, its exposure to European banks have been beneficial, given the improved sentiment in the eurozone. While its stock selection within communication services has also been helpful. On the other hand, our more quality oriented managers, Morgan Stanley Global Brands and Fundsmith Equity Fund, are in positive territory but have lagged the ACWI because of their overweight to defensive areas such as consumer staples and healthcare.

In the fixed income space, our longer duration managers, for example PIMCO Global IG Credit, have stood out as yields have fallen and credit spreads narrowed on hopes for a softer landing following better than expected economic data from the US.

In terms of real assets, JLEN Environmental Assets Group announced its first foray into the green hydrogen sector, with an investment in a development stage green hydrogen production plant in Germany.

Finally, on alternative strategies, the GCP Asset Backed Income Fund released its Q4 net asset value (NAV) total return, which was up 0.3%. Unfortunately, it also announced further write-downs to the Co-Living Group Loan and added an additional asset to the watchlist. On the positive side, the fund has remained active with £45 million of new loans made in the period as the fund recycles capital to take advantage of higher interest rates. This along with some benefits from inflation has appeared to offset the write downs.

What's happening this week?

1 February • US Federal Reserve Interest Rate Decision | 2 February • UK BoE Interest Rate Decision | 2 February • EU ECB Interest Rate Decision

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how their portfolios are responding to market events, or call +44 (0)1624 645000 to speak to our client services team.

If you would like to find out more about how we manage clients’ investments, please contact us on the same number as above. Or you can get in touch using the links to the forms towards the end of this page.

Sources: Nedbank Private Wealth and (1) Bloomberg, (2) Reuters, (3) US Department of Labor Statistics, (4) S&P Global, (5) Bank of Canada and (6) Financial Times

The value of investments can fall, as well as rise, and you might not get back the original amount invested. Exchange rate changes affect the value of investments. Past performance is not necessarily a guide to future returns. Any individual investment or security mentioned may be included in clients’ portfolios and is referenced for illustrative purposes only, not as a recommendation, not least as it may not be suitable. You should always seek professional advice before making any investment decisions.

Access more of our insights


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The week of 20 February 2023 saw stronger than expected inflation and economic growth reports and a more hawkish stance from central banks, leading to widespread declines in markets.

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