Market Monitor – 3 February 2023
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Market Monitor – 3 February 2023

Global stock markets have added to their recent gains on renewed hopes that central banks are starting to slow the pace of interest rate rises.

While this week saw each of the US Federal Reserve, the European Central Bank (ECB) and the Bank of England (BoE) extend their programmes of monetary-policy tightening, investors have largely interpreted the accompanying comments from policymakers as an indication that the war on inflation is being won. At the same time, there are increasing signs that the economic impact of rising rates could turn out to be less severe than previously feared. Markets have also been boosted by yet more positive company earnings reports, in the technology sector in particular.

US markets

On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.2% up for the week so far, with the S&P 500 surging 2.7%. Gains on the latter index and on the tech-heavy Nasdaq were particularly strong thanks to the prospect of interest rates starting to come down later in 2023 as well as encouraging trading statements from major technology companies. The news from the US was not entirely positive, however, with a reported fall in consumer confidence as well as ongoing tightening in the labour market.

Europe

In the UK, the FTSE 100 closed on Thursday 0.7% up for the week so far, after the BoE announced the latest in a string of interest rate rises. This takes the base rate to 4%. However, comments from governor Andrew Bailey suggesting the UK was likely to endure a shorter and less severe recession than previously feared provided a significant boost to the market’s more domestically focused companies in particular. Bailey’s analysis was especially welcome after the International Monetary Fund predicted on Monday that Britain would be the only major developed economy to experience negative growth for the whole of 2023. Meanwhile, latest data from S&P Global’s PMI survey indicated a sixth successive monthly contraction for UK manufacturers.

In Frankfurt, the DAX index ended Thursday’s session up 2.4% for the week, while France’s CAC 40 gained 1%. Investors were unsurprised by the ECB’s decision to raise rates by a further 50 basis points and sentiment remained positive despite policymakers’ warnings that further increases were in the pipeline. The news that the eurozone inflation rate had fallen to 8.5% in January from 9.2% at the end of 2022 helped to lift markets, as did figures showing that the downturn in the region’s manufacturing sector had started to slow.

Asia

In Asia, the Hang Seng index in Hong Kong dipped 3.2%, giving up some of the gains it had made a week earlier following the new year holiday. Latest data showed that the Hong Kong economy shrank for the fourth quarter in a row in the last three months of last year as the Chinese government’s Covid-related restrictions continued to bite. Investors now await data about the health of the country’s wider economy. Japan’s Nikkei 225 index of leading shares advanced 0.1%, with gains from the prospect of lower rates in the US offset to some extent by the strengthening yen.

27 January
2 February
Change (%)
FTSE 100
7765.2
7820.2
0.7
FTSE All-Share
4259.0
4302.9
1.0
S&P 500
4070.6
4179.8
2.7
Dow Jones
33978.1
34053.9
0.2
DAX
15150.0
15509.2
2.4
CAC 40
7097.2
7166.3
1.0
ACWI
650.4
662.3
1.8
Hong Kong Hang Seng
22688.9
21958.36
-3.2
Nikkei 225
27382.6
27402.1
0.1

Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 2 February 2023.

3 February 2023
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Market Monitor – 3 February 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.

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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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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