< Back to News Room


Market Commentary Shorts – February 2023

share on

The markets began the year in an optimistic mood, with global equities and bonds gaining, and maintaining their positive correlation. While falling inflation releases and reduced expectations of higher future interest rates helped spur the rally.



With headline inflation declining, the markets opened the year strongly

US equities had a robust start to the year, as headline year-on-year inflation declined to 6.4%, signalling that the Federal Reserve may need to reassess the future path of policy rate hikes. Falling home, car, and retail sales are potential signs of an economic slowdown materialising. PMI’s ticked higher, albeit remaining in negative territory, and wage pressures also declined, despite unemployment falling to a 53-year low. Both equities and bonds rallied, with the former led by the consumer discretionary and materials sectors. The US dollar weakened against most developed and emerging currencies. Up 6.2% (US 500)


A strong start to the year for the markets by a challenging economic environment

Led by cyclical selections within consumer discretionary, construction and real estate, the UK equity market enjoyed a strong start to the year, outperforming broader developed market equities. December’s year-on-year inflation figures fell marginally, with energy and food prices easing.  However, the country is still witnesses inflation well above long-term trend levels, with robust wage growth a contributing factor. PMI’s remain in negative territory and the market is pricing negative economic growth for 2023. Retail sales are declining and aggregate demand is beginning to slow. The Bank of England will have a difficult task raising borrowing rates against this increasingly recessionary backdrop. Up 4.4% (UK All Share)


Falling headline inflation and a mild winter helped to rally the markets

European equities outperformed their global counterparts in local currency terms, as macroeconomic data surprised on the upside for January. PMI’s shifted into expansionary territory, while a mild winter has provided welcome downward pressure on energy markets.  Consumer sentiment improved for the fourth consecutive month. Notably, inflation readings once again declined, falling to 9.2%, adding further food for thought on whether the ECB will maintain their hawkish approach. European government bonds also outperformed treasuries and global counterparts, while the currency experienced more of a mixed month against developed and emerging equivalents. Up 6.7% (Euro 600 Index)


A mixed performance to start the year for Japanese markets

The performance of the Japanese market was more mixed than other developed markets, as equities rose in local currency terms, bonds underperformed, and the Yen fell slightly. Domestic stock market performance was driven by consumer discretionary and technology sectors, both of which lagged in December. Despite 2023 GDP growth expectations being ahead of the US, Eurozone and the UK, composite PMI’s remain in negative territory and inflation is at 4.0% year-on-year (a 31-year high). This has moved the central bank to loosen its yield curve control policy.  However, intervention was required mid-month to maintain the new wider limit that had been imposed. Up 4.4% (Japan Index)

Need to know more? If you have a question, would like more information, or are seeking financial planning or Wealth Management advice please contact hello@jarrovian.co.uk

DISCLAIMER – The value of your investment and any income from it may go down as well as up. You may not get back the original amount you invested. Past performance is used as a guide only; it is no guarantee of future performance.

Jennifer Turner


For a no-obligation consultation with one of our Financial Planners, please call 0330 058 5000