The week in review

The week of 30 January 2023 saw a barrage of interest rate hikes in line with expectations but more dovish sentiment. The strong rally in equity markets continued as investors embraced risk.
Published 7 February
4¼ mins

What’s happened in markets?

FTSE All Share1.905.1211.106.576.385.474.87
Euro Stoxx 501.929.8019.1712.436.588.277.20
S&P 5001.648.2811.687.86-6.0910.1310.32
Japan Topix-0.624.161.714.165.388.173.54
MSCI Asia Pac.-1.158.2227.079.31-9.403.470.29
MSCI Emerg. Mkts.-1.187.9621.188.66-11.402.02-0.64
Jo’burg All Shares-0.687.8921.829.9412.2517.3710.49
UK Gov’t Bonds1.644.242.754.29-17.09-7.59-2.11
US Gov’t Bonds-0.051.934.882.28-8.51-2.680.77
Global Corp. Bonds0.493.477.963.88-7.96-2.091.56
Emerg. Mkt. Local0.385.7515.495.66-5.55-2.85-0.96
Figures in the respective local currencies as at the end of trading on 3/2/2023.

The Federal Reserve (Fed), European Central Bank (ECB) and Bank of England (BoE) all hiked rates as expected over the week of 30 January, but markets interpreted the post-meeting press conferences as more dovish.  

In the US, the Fed raised its rates by another 0.25% as anticipated.  But the real surprise came on Friday as the US nonfarm payrolls for January rocketed by 517,000, above estimates of 187,000. This brought the unemployment rate down to 3.4%, from 3.5% in December and its lowest level since 1969. The latest Job Opening and Labour Turnover (JOLTS) report also uncovered a tighter than expected labour market in December with more than 11 million job openings. Friday also saw a rebound in service sector activity as the Institute of Supply Management’s index for January rose to 55.2, above the 50 marker and back into expansion territory.

In Europe, the ECB announced a rate increase of 0.50% as expected, taking its deposit rate to 2.5%. The central bank signalled it planned to do the same again in March and intended to stay the course on raising rates. The latest economic data for the euro area has been surprisingly upbeat with the economy growing 0.1% according to the gross domestic product (GDP) for Q4 (in contrast to -0.1% anticipated). The annual inflation rate also cooled more than expected with the consumer price index (CPI) coming in at 8.5% in January, down from 9.2% in December.

In the UK, the BoE voted to raise its key interest rate in line with expectations, up by 0.5% to a 15-year high of 4%. This was the tenth consecutive increase, but policymakers indicated that rates may have peaked, and the anticipated recession is likely to be milder and shorter than previously thought.

In corporate news, it was a busy week for quarterly earnings reports, particularly from Big Tech companies. Meta, which owns Facebook, Instagram and WhatsApp,  surprised the market by announcing a US$40 billion share buyback, as well as beating expectations on revenue and user engagement. In contrast, Alphabet, Amazon, and Apple all disappointed with their earnings releases on Thursday. The tech industry is experiencing a taste of reality after the soaring demand for electronics and computing storage during the pandemic. When markets opened on Friday, Amazon shares fell 4.7% and Alphabet (the parent company of Google) by 3.7%.

In other news, US President Biden moved closer towards imposing a ban on the sale of US technology to Chinese telecom company Huawei. US-China relations took a further blow over the weekend when a US fighter jet shot down a suspected Chinese spy balloon.

The rally in equity markets continued over the week of 30 January following the central bank rate decisions and shrugging off the mixed earnings reports from Big Tech. Although there was a sharp sell off on Friday due to the stronger than expected economic data, the trend for equity markets remained strongly up. Developed market equites (+7.6%) took a lead over emerging markets (+6.7%), while growth (+11.5%) remained in favour due to the higher duration nature of the assets and continued to outperform value (+3.7%). Small capitalisation stocks (+9.8%) remained ahead of large capitalisation stocks (+7.3%) over the last 30 days. Information technology (+15.4%) was the best performing sector, with communication services (+14.5%) and consumer discretionary (+13.3%) also remaining strong. While the more defensive sectors, consumer staples (0.5%), healthcare (-1.0%) and utilities (-2.4%) continued to lag.

Despite the round of rate increases, yields were fairly flat over the week as a whole. However, the trend over the year to date is for falling yields after markets interpreted the central bank press conferences as dovish and started pricing in a higher likelihood of rate cuts towards the end of the year.

After falling slightly, the US dollar had a good finish to the week following the surprising US jobs report for January.




UK GDP (QoQ)-0.30.0
UK PMI48.5
UK CPI (YoY)10.5
EU GDP (QoQ)0.1
EU PMI50.3
EU CPI (YoY)8.5
US GDP (QoQ)2.9
US PMI55.2
US CPI (YoY)6.5

What’s happened in portfolios?

In equities, given the risk-on environment, our value manager Dodge and Cox Global Stock has been the outperformer over the month. It’s been helped by its cyclicality and its overweight to communication services, where its stock selection (including Alphabet, Baidu, Charter communications and Meta) has been strong. On the other side, our quality oriented managers, Fundsmith Equity and Morgan Stanley Global Brands, have lagged the All Country World Index (ACWI) because of their overweight to defensive areas such as consumer staples and healthcare.

In the fixed income space, the fall in yields meant our longer duration credit and government bond funds outperformed our shorter duration holdings. In particular, credit stood out as the risk-on environment and better than expected economic data caused credit spreads to narrow, which has helped our longer duration managers, PIMCO Global IG Credit and Wellington Global Credit Plus.

In terms of real assets, the indirect areas such as Nedgroup Global Property and Atlas Global Infrastructure followed equities higher with the risk-on environment and fall in yields making them even more attractive.

Finally, on alternative strategies, Princess Private Equity stood out, up around 11% over the month, and released its December net asset value (NAV) which was up 3.4%, helped by portfolio revaluations.

What's happening this week?

6 February • EU ECB President Lagarde Speech | 9 February • US Initial Jobless Claims | 10 February • UK Gross Domestic Product (GDP)

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) Europa EU and (5) 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.

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