23.08 Liontrust Views Summer 2023 Literature (Single) - Flipbook - Page 8
MARKET
OUTLOOK
The second quarter of 2023 saw some
positive movement in global stock markets
while the picture for bonds was less
optimistic due to the looming prospect of
further central bank interest rate hikes.
Positive data demonstrating the economic
resilience of developed economies helped
to stabilise investor sentiment following the
drama seen in March in the financial sector
(with the implosion of US technology bank
Silicon Valley Bank) and its knock-on effects.
While the periodic political standoff
regarding the US debt ceiling caused some
uncertainty, market fears were eased by
the end of the month when the House of
Representatives passed the required bill to
resolve the uncertainty.
8
LIONTRUST VIEWS – SUMMER
However, questions around how far
monetary tightening through the raising of
interest rates would go to tackle inflation
continued to be a key factor for markets.
Bonds, especially US treasuries, weakened
on statements made at the meeting in Sintra,
Portugal, of the world’s top central bankers,
who warned that tight labour markets
continued to push up wages and inflation
and that tougher action through increasing
interest rates could be needed.
European Central Bank (ECB) president
Christine Lagarde told the conference that
there was still insufficient evidence that core
inflation was stabilising and falling, sending
a negative message about interest rates.
Asset class outlook
When we are positive about an asset class,
we categorise it as ‘overweight’ and may look
to increase our allocation to it. Conversely,
when we are negative about an asset class,
we classify it as ‘underweight’ and may
reduce the allocation. Finally, ‘neutral’ means
that we are not positive or negative.
KEY
Overweight
Underweight
Neutral
