Market Monitor – 20 January 2023
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Market Monitor – 20 January 2023

Mixed economic data in the United States provided investors with fresh grounds for pessimism this week, sending global shares lower after a largely positive start to the year.

Markets appear increasingly resigned to a continuation of 2022’s interest rate rises, as well as a slowdown in growth as tighter monetary policy takes its toll. Continued warnings from central bankers that they will have no choice but to raise rates again and again until inflation drops significantly appear to be breaking through.

In the US, Wednesday’s weak retail sales figures initially fuelled speculation that the Federal Reserve may start to slow the pace of rate rises in the near future. But these hopes were dashed 24 hours later by statistics underlining the tightness of the American jobs market – and the potential for rising wages to add to inflationary pressures. Meanwhile, a majority of economists at the World Economic Forum in Davos, Switzerland, forecast a global recession in 2023. Fears of slowing growth continue to weigh on the energy and commodity stocks which performed so strongly in the first half of last year.

US markets

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 3.7% down for the week so far, giving up all its 2023 gains to date, with the S&P 500 losing 2.5%. While mixed economic data has been behind most of this week’s decline, weak quarterly trading reports have also played a part in driving stocks lower. There are signs that bank earnings may not be holding up as well as previously thought, while a number of major technology businesses are planning widespread cost-cutting programmes in response to a deteriorating outlook. With the Fed warning it will carry on tightening monetary policy despite its impact on growth, investors are increasingly concerned that a damaging slowdown is on the horizon.

Europe

In the UK, the FTSE 100 closed on Thursday 1.2% down, despite a bright start to the week which saw the index add to recent gains and approach its record high. Earnings reports from London-listed firms have been positive overall so far and markets are hopeful the UK recession may be less severe than has been feared. However, the slump in US stocks and signs of weakening global growth – which saw energy and commodity prices fall later in the week – dragged the FTSE down on Wednesday and Thursday.

In Frankfurt, the DAX index ended Thursday’s session down 1.1% for the week, while France’s CAC 40 lost 1%. European shares endured their worst day of 2023 on Thursday as a result of falls on Wall Street, fears about a worldwide recession and the latest hawkish comments from the European Central Bank. The organisation’s chair, Christine Lagarde, reiterated that interest rates would continue to rise this year, possibly as steeply as in late 2022, while inflation remains ahead of target.

Asia

In Asia, the Hang Seng index in Hong Kong dipped 0.4% as latest figures demonstrated the impact of China’s strict Covid-19 policies on the country’s growth last year: the Chinese economy expanded by the smallest amount in nearly 50 years in 2022. Japan’s Nikkei 225 index of leading shares, meanwhile, gained 1.1% thanks to the Bank of Japan’s decision to keep its monetary policy unchanged, despite rising inflation in the country.

13 January
19 January
Change (%)
FTSE 100
7844.1
7747.3
-1.2
FTSE All-Share
4291.4
4234.9
-1.3
S&P 500
3999.1
3898.9
-2.5
Dow Jones
34302.6
33044.6
-3.7
DAX
15086.5
14920.4
-1.1
CAC 40
7023.5
6951.9
-1.0
ACWI
638.1
627.5
-1.7
Hong Kong Hang Seng
21738.7
21650.98
-0.4
Nikkei 225
26119.5
26405.2
1.1

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 19 January 2023.

23 January 2023
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Market Monitor – 20 January 2023

Important information

For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk.  Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

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Important information

For marketing purposes.

This document is intended for informational purposes only and should not be considered representative of any particular investment. This should not be considered an offer or solicitation to buy or sell any securities or other financial instruments, or to provide investment advice or services. Investing involves risk including the risk of loss of principal. Your capital is at risk.  Market risk may affect a single issuer, sector of the economy, industry or the market as a whole. The value of investments is not guaranteed, and therefore an investor may not get back the amount invested. International investing involves certain risks and volatility due to potential political, economic or currency fluctuations and different financial and accounting standards. The securities included herein are for illustrative purposes only, subject to change and should not be construed as a recommendation to buy or sell. Securities discussed may or may not prove profitable. The views expressed are as of the date given, may change as market or other conditions change and may differ from views expressed by other Columbia Threadneedle Investments (Columbia Threadneedle) associates or affiliates. Actual investments or investment decisions made by Columbia Threadneedle and its affiliates, whether for its own account or on behalf of clients, may not necessarily reflect the views expressed. This information is not intended to provide investment advice and does not take into consideration individual investor circumstances. Investment decisions should always be made based on an investor’s specific financial needs, objectives, goals, time horizon and risk tolerance. Asset classes described may not be suitable for all investors. Past performance does not guarantee future results, and no forecast should be considered a guarantee either. Information and opinions provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. This document and its contents have not been reviewed by any regulatory authority.

In the UK: issued by Threadneedle Asset Management Limited, registered in England and Wales, No. 573204. Registered Office: Cannon Place, 78 Cannon Street, London EC4N 6AG. Authorised and regulated in the UK by the Financial Conduct Authority.

In Australia: Issued by Threadneedle Investments Singapore (Pte.) Limited [“TIS”], ARBN 600 027 414.  TIS is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cth) and relies on Class Order 03/1102 in respect of the financial services it provides to wholesale clients in Australia. This document should only be distributed in Australia to “wholesale clients” as defined in Section 761G of the Corporations Act. TIS is regulated in Singapore (Registration number: 201101559W) by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289), which differ from Australian laws.

In Singapore: Issued by Threadneedle Investments Singapore (Pte.) Limited, 3 Killiney Road, #07-07, Winsland House 1, Singapore 239519, which is regulated in Singapore by the Monetary Authority of Singapore under the Securities and Futures Act (Chapter 289). Registration number: 201101559W. This advertisement has not been reviewed by the Monetary Authority of Singapore.

In Hong Kong: Issued by Threadneedle Portfolio Services Hong Kong Limited 天利投資管理香港有限公司. Unit 3004, Two Exchange Square, 8 Connaught Place, Hong Kong, which is licensed by the Securities and Futures Commission (“SFC”) to conduct Type 1 regulated activities (CE:AQA779). Registered in Hong Kong under the Companies Ordinance (Chapter 622), No. 1173058.

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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