Since we released our Q3 Investment Update in October we have seen equity markets rally and bonds trade flat to slightly higher. Europe’s EuroStoxx50 index has impressively bounced by 23% from its 2022-lows, while the S&P 500 is up by circa 17% over the same time period. Early signs that we may be currently seeing, or have already seen in some cases, peak inflation in key areas around the globe have resulted in a scaling back of rate hike expectations, helping risk appetite. Markets now see US rates peaking around 5%, UK reaching 4.25% and Eurozone rates getting to just below 3% before pausing there. One of the biggest market moves lately has been the US dollar which has lost significant ground over the past couple of months. The Euro has increased from $0.98 at the start of October to its current $1.05, while Sterling has climbed from roughly $1.12 to $1.23 during this period.
We acknowledge that the uncertainties around current economic conditions and policy actions have the potential to cause short-lived episodes of volatility at some stage during H1 2023, and investors will remain focused on whether central banks can tame inflation without triggering a global recession. Nonetheless, economic and corporate fundamentals remain strong, as reflected in tight labour markets and generally healthy balance sheet positions. This means that any further signs that inflation has peaked and is falling may spark a shift in policy direction and will most likely improve market sentiment.
At Seaspray we believe the importance of maintaining a longer-term view, and a consistent strategy and approach to your investments is vital, especially during a bear market. In this piece, we will discuss the major developments that financial markets have seen so far this quarter, and look ahead to what is set to be an interesting final month of the year for investors.
Read the full report below or download here.Seaspray-Private-Nov-Interim-Report