What’s happened in markets?

FTSE All Share -2.48 -1.36 4.26 4.48 10.59 11.83 4.79
Euro Stoxx 50 -1.52 0.77 7.75 11.83 20.01 16.62 7.71
S&P 500 -4.51 -5.42 -1.44 0.91 -7.81 12.02 8.61
Japan Topix 0.60 2.28 3.79 7.43 14.02 15.78 5.92
MSCI Asia Pac. -3.87 -6.81 -2.75 -0.39 -10.08 1.89 -1.03
MSCI Emerg. Mkts. -3.28 -5.67 -1.96 0.04 -10.54 2.40 -1.91
Jo’burg All Shares -2.24 -3.09 2.83 4.88 7.79 20.17 9.20
UK Gov’t Bonds 2.30 -0.89 -2.60 0.87 -17.94 -10.39 -2.86
US Gov’t Bonds 1.63 0.56 0.25 1.57 -7.60 -4.45 0.65
Global Corp. Bonds 0.86 -0.52 0.07 1.84 -6.24 -2.67 1.30
Emerg. Mkt. Local 0.23 -1.61 2.50 1.66 -2.68 -3.10 -1.69
Figures in the respective local currencies as at the end of trading on 10/3/2023.


In the US, the week saw mixed jobs data. Job growth remained robust as US nonfarm payrolls rose in February by 311,000 jobs, more than the 225,000 expected but less than the very strong 504,000 reported in January. As the labour force grew, the unemployment rate edged up to 3.6% and monthly wage inflation cooled, rising at its slowest pace in a year. Federal Reserve (Fed) chair Powell made a number of hawkish remarks on Tuesday, which triggered a slide in markets. He admitted that recent stronger economic data suggested the ultimate level of interest rates is likely to be higher than previously anticipated.

The UK economy rebounded surprisingly in January as gross domestic product (GDP) grew by 0.3%, having shrunk by 0.5% in December. Market consensus had expected a 0.1% rise.

In Europe, shares also fell along with global markets over concerns about persistent inflation and prolonged interest rate hikes. Eurozone economic growth for the fourth quarter of 2022 was revised to 0%, below the initial forecast of 0.1%.

Elsewhere, the Bank of Canada and Bank of Japan left their rates unchanged.

In corporate news, the California Department of Financial Protection and Innovation shut down Silicon Valley Bank (SVB) on Friday, less than two days after the bank tried to stem withdrawals following liquidity concerns. SVB, which focused on lending to tech start-ups, became the largest bank to fail since the 2008 financial crisis. The collapse unsettled markets and caused bank shares to fall across the US and Europe. To avoid wider contagion the regulators stepped in to guarantee SVB’s deposits and the Fed have provided support with the liquidity issues.

In other news, US president Joe Biden unveiled the administration’s initial 2024 budget. The proposal increases funding on an array of government programmes, including making Medicare more solvent, lowering prescription drug prices and trimming the deficit by $3 trillion over the next decade. Inevitably, this would be dependent on strong growth and revenue raised through proposed tax increases on the wealthiest Americans and on oil and gas companies.

The week of 6 March saw markets down sharply as risk assets came under pressure due to negative market sentiment. Developed market equites (-5.0%) remained ahead of emerging markets (-6.3%), while growth (-5.2%) fell more than value (-4.9%) and small-caps (-5.9%) underperformed large-caps (-4.9%) over the last 30 days. Consumer staples (-1.4%) was the best performing sector while real estate (-9.7%) continued to be the worst performer. Financials (-7.3%) came under pressure after being seen as guilty by association following the news on SVB. Communication services (-7.3%) and consumer discretionary (-6.5%) also lagged.

In fixed income, yields initially rose, pricing in a higher US terminal rate, but fell on Friday after the news broke on SVB and led to a flight to safety. The yield on the two-year US Treasury note fell from around 5.0% to 4.6%. While the risk-off sentiment also saw the yield on 10-year US Treasury notes down nearly 23 basis points to 3.7% over the week. Bond yields and prices move in opposite directions.

The US dollar continued to appreciate against most major currencies.

Latest Consensus


UK GDP (QoQ) 0.0
UK PMI 53.1
UK CPI (YoY) 10.1
EU GDP (QoQ) 0.0
EU PMI 52.0
EU CPI (YoY) 8.5 8.5
US GDP (QoQ) 2.7
US PMI 55.1
US CPI (YoY) 6.4 6.0

What’s happened in portfolios?

The week of 6 March 2023 was a week of two halves with hawkish rhetoric from the Fed at the start of the week raising rate expectations, but a flight to safety towards the end of the week as news of the SVB collapse filtered through to markets. Our exposure to SVB across portfolios is negligible, with less than a basis point held through our passive exchange-traded funds. These funds track major global indices and provide a significant level of diversification. We are monitoring the situation but doubt it will lead to wider contagion.

In equities, our defensive, quality managers, such as Fundsmith Equity Fund, performed relatively well as they are less responsive to rate rises and also more immune to the cyclicality arising from risk-off sentiment. We are currently underweight to financials.

In fixed income, our holdings benefited from the decline in government bond yields following the flight to safety later in the week. Short duration bonds outperformed given concerns over further rate hikes. A widening of credit spreads put high yield and investment grade bonds under pressure, but our more defensive exposure worked out well for us.

Our real assets have been under a degree of pressure with yields on the rise. Although, our more defensive areas such as ATLAS Global Infrastructure performed relatively well for us.

Our alternative strategies have, broadly speaking, offered a good level of diversification over recent weeks. Princess Private Equity and Oakley Capital Investments have provided some strong outperformance on the month to date. While Hipgnosis Songs Fund has also performed well.

What’s happening this week?

14 March • US Consumer Price Index | 15 March • UK Spring Budget | 16 March • EU ECB Interest Rate Decision