Monthly Commentary | February 23

Financial markets began 2023 with a significant uplift in value, and investors across a wide range of sectors in property, equities and fixed income markets saw their asset values rise.  The reasons for this are many and varied as is often the case in the financial world, but one key element would be the sense that the interest hiking process is nearing the end and that investors believe that as interest rates stabilise at these levels, valuations across all sectors will stabilise too resulting in more certainty and confidence.

However, it is much too early to call an end to the repair process, and whilst we agree that the end of central bank tightening may be close, there are still a number of factors that would lead us to conclude that we are some ways from the start of a new bull market.  Whilst it is quite likely that volatility in markets will likely be a continuing feature in coming months, it is pleasing that this may be signalling that the markets have found their ‘floor’ and looking for reasons to consolidate in anticipation of future gains.  

Underlying issues around a shortage of labour globally, questions over money supply (especially in the US), geopolitical tensions/war, and stubborn inflation have not disappeared, but as the world continues to open up from the border closures and industry shutdowns, the demand/supply imbalance will slowly improve and both individuals and corporates will re-tune themselves to this higher price, higher interest rate world.