January has provided an encouraging start to 2023 in asset markets. It has been a month of strong returns across the Wealthlineinvest Portfolios, with positive returns across all risk profiles.
Looking across asset markets, there has been notable strength in global equity markets in particular with the MSCI World Index (£) returning 4.5%. The strong performance comes despite what could be described as a mixed company reporting period, characterised in the case of the technology sector, by many announcements reducing headcount. The performance from international equity markets was stronger than the US, with broad European equities and emerging markets contributing strongly to the overall strength in global equity markets. Bond markets, sovereign, and corporate have also provided a positive return, in the period with sovereign bond yields coming in over the month, with the UK 10 year Gilt coming in from 3.66% to 3.33% and in the case of the US 3.83% to 3.49%.
The primary factors influencing asset markets are better economic data, particularly in relation to GDP (economic growth), an ongoing reduction in the rate of inflation (disinflation) and expectations that interest rates may not rise as high as previously expected – and indeed that reductions can take place. In the coming months these points will be a key focus for our Investment Management Committee and our Investment Partners.