Market Update

Markets update: Markets finish out Q1 in positive territory

By Business & Finance
03 April 2023

Last week saw US stocks post gains as investors re-evaluated the trajectory of monetary policy. US stocks finished Q1 of 2023 in positive territory on Friday, after a volatile close to the quarter, writes Ian Slattery.


Ian Slattery, Zurich Investments

Much of the positive sentiment has been attributed to the tech sector, which outperformed and offset some of the losses seen in financial sector stocks recently, which suffered due to the recent banking sector turmoil.

Optimism in markets was extended last week with the release of US core PCE, the Federal Reserve’s preferred measure of inflation.

The price index, which excludes the volatile food and energy sectors, increased by 0.3% for the month of February. This figure was below the consensus estimate of 0.4% and also below the previous month’s 0.5% increase. The lower inflation reading lead some investors to anticipate softer monetary policy from the Fed.

The Federal reserve has engaged in its most aggressive rate hiking policy in four decades over the last number of months, raising the benchmark interest rate nine times since March of 2022 in a battle to tame inflation.

Lower policy rate expectations have seen positive sentiment in markets, with many investors hoping for an end to bear market conditions.

Markets in Europe followed a similar trajectory last week, finishing the first quarter of 2023 in positive territory. The release of Eurozone inflation data last week was a key factor in improved investor sentiment with the headline figure being its lowest in over a year. The report, released by Eurostat last Friday, indicated that consumer prices in the Eurozone increased by 6.9% year to date in March, down sharply from 8.5% in February. The figure came in lower than economists’ expectations, with much of the decrease being attributed to lower energy prices.

There were however some calls for caution as core inflation, which is often viewed as a more accurate gauge of price pressures, came in at a record high of 5.7%, up 0.1% from the previous month. It remains to be seen how policy makers will react in due course.

Equities

Global stocks were up last week by 2.6% in euro terms and 3.4% In local terms. Year-to-date global markets were up 5.8% in euro terms and 7.7% in local terms. The US market, the largest in the world, finished at 2.6% in euro terms and 3.4% in local terms.

Fixed Income & FX

The US 10-year yield finished at 3.49% last week. The German equivalent finished at 2.31%. The Irish 10-year bond yield finished at 2.76%. The Euro/US Dollar exchange rate finished at 1.09, whilst Euro/GBP finished at 0.88.

Commodities

Oil finished the week at $80 per barrel and is up 6.0% year-to-date in euro terms. Gold finished the week at $1,977 per troy ounce and is up 0.1% year-to date in euro terms. Copper finished the week at $9,004 per tonne.

The week ahead

Tuesday 4th April
Royal Bank of Australia makes interest rate decision.

Wednesday 5th April
US Manufacturing and Services PMIs are released.

Friday 6th April
US Non-farm payrolls and unemployment Rate go to print.

About: Zurich Investments

The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €28.4bn in investments of which pension assets amount to €17.4bn. Find out more about Zurich Life’s funds and investments here.

The team at Zurich Investments is a long established and highly experienced team of investment managers who manage approximately €28.4bn in investment of which pension assets amount to €17.4bn. To find out more about Zurich Life’s funds and investmentsw: zurichlife.ie/fundsTwitter: @ZurichLife,

LinkedIn: linkedin.com/company/zurich-life-assurance-plc

Warning: Past performance is not a reliable guide to future performance. Benefits may be affected by changes in currency exchange rates. The value of your investment may go down as well as up. If you invest in these funds you may lose some or all of the money you invest. 


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