23.08 Liontrust MA Quarter In Review Q2 Literature (Single) - Flipbook - Page 3
Global equities mostly higher but bonds struggle amid
inflation fears
• Global equities mostly ground higher during Q2 but fixed
income struggled as fears rose of more central bank rate hikes
to come.
• Investor sentiment stabilised early in the quarter after the jitters
around the financial sector in March, helped by data pointing
to economic resilience in developed economies.
• The most significant news in an otherwise relatively quiet quarter
was the periodic political standoff regarding the US debt
ceiling. However, market fears were eased when the House of
Representatives passed the required bill.
• Although data showed headline inflation continued to fall from
the highs seen in 2022, helped by lower energy prices, core
inflation remained stubbornly high. The world’s top central
bankers, meeting at Sintra in Portugal, warned that tight labour
markets continued to push up wages and inflation and that stiffer
action on interest rates could be needed. Bonds, especially US
treasuries, weakened on the statements.
• Central banks continued to tighten monetary policy over the
quarter: the Federal Reserve raised its benchmark interest rate
by 25bps, the Bank of England by 75bps and the European
Central Bank by 50bps.
Investor sentiment stabilised early in
the quarter after the jitters around the
financial sector in March
• Latest economic data for Q1 pointed to resilience in developed
markets. Eurozone GDP rose by 0.1%, although manufacturing
was substantially weaker than the services sector. In the US,
a significant upward revision of Q1 GDP raised expectations
that higher interest rates would be needed to tame inflation. US
initial jobless figures were also stronger than expected.
• Weakening oil prices and the Bank of England’s aggressive
rate hiking to quell inflation that is the most elevated among
developed economies weighed on UK stocks and government
bonds (gilts) over the quarter.
• Japan was a strong equities performer, with the Nikkei reaching
a 33-year high. New Bank of Japan governor Kazuo Ueda said
at Sintra that economic growth and wages were picking up at
home after decades of near stagnation, raising the possibility
that the Bank of Japan could relent on its ultra-loose economic
policy.
• China’s post-Covid recovery appeared to be losing steam. Six
months after reopening after Covid, China still faces issues,
including declining trade activity and a weak property sector.
The most significant news in an
otherwise relatively quiet quarter was
the periodic political standoff regarding
the US debt ceiling
Japan was a strong equities performer,
with the Nikkei reaching a 33-year high.
New Bank of Japan governor Kazuo
Ueda said at Sintra that economic growth
and wages were picking up at home after
decades of near stagnation
Liontrust Multi-Asset Funds and Portfolios Quarterly Report: Q2 2023 - 3
