2023: Market returns so far
With the month of June now behind us we look back at the first half of 2023 and how markets have behaved.
On the back of a difficult year in 2022, equity returns have certainly rewarded loyal investors so far. Developed equity markets are up: MSCI World is up +15.4% with regional postings of S&P 500 +16.9% in the US and MSCI UK +2.5%. Specifically, mega cap ‘tech like’ growth stocks have continued their outperformance on the back of Artificial Intelligence optimism with the top 9 names of the S&P 500 accounting for 74% (12.6%) of the 16.9% return (you can read more about the narrowness of equity returns in the S&P 500 index here). June, itself, brought signs of a broadening in equity performance, perhaps signalling an end to the narrowness in equity returns as the same names represented only 32% of the overall gain.
For bond investors, the first half the year has been more challenging with the Bloomberg Global-Aggregate index returning a muted +1.43%, as prices reflected the changes in interest rate expectations. Commodities, top of the class last year, have lagged the market returning -10%.
After a long-anticipated counteroffensive from Ukraine, Putin faced challenges at home with a rebellion of a subset of The Wagner Group, a paramilitary organisation threatening military leadership and advancing to Moscow. China-US tensions seemingly softened after U.S. Secretary of State Antony Blinken’s visit to speak with Chinese President Xi Jinping. This is the first U.S. Secretary of State to visit China since 2018 and it was previously scheduled for February before the trip was abruptly postponed after the U.S. military shot down a suspected Chinese spy balloon. At the OPEC+ (Organisation of the Petroleum Exporting Countries) meeting, Saudi Arabia announced additional oil production cuts in an effort to boost prices leading to a 3.2% increase in Brent crude.
