Market Outlook Spring 2023

The turmoil in bank stocks rattled equity markets in March. Following the failure of Silicon Valley Bank in the US and the emergency takeover of Credit Suisse by local rival UBS as the sell-off in banks stocks dragged on wider equity markets. This reversed a lot of the equity gains from the start of the quarter as the expectation that developed markets would enter recession receded as data showed economic activity remained robust. China’s sudden removal of strict zero-Covid policy in December added to the more positive outlook at the start of the quarter. Persistently high inflation has continued to shape markets. In the UK, headline and core inflation both increased in February and the Consumer Prices Index has remained above 10% for the last six months, while in the US core Personal Consumption Expenditure inflation, a closely watched indicator at the US Federal Reserve, also increased. Bonds experienced very high volatility as investors continued to adjust their expectations for central bank interest rates. Bonds sold off in January and February before rallying strongly as investors reduced expectations for further interest rate hikes. Longer-dated bonds, those with the greatest sensitivity to interest rate movements, experienced the biggest change in value and ended the quarter with the largest gains, as markets expect central banks are getting close to the end of the rate hiking cycle.

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This message is the opinion of Velarium Wealth and contains a document produced by FE Investments that we feel is relevant at the current time. This document has been prepared for general information only and is not guaranteed to be complete or accurate. It does not contain all of the information which an investor may require in order to make an investment decision.