Here’s a review of how some of the key events from the past twelve months have impacted markets.

1. Feb-23: Global markets fell after higher-than-expected US inflation fuelled fears that the Federal Reserve will need to raise interest rates further. The UK narrowly avoided recession at the end of 2022 and UK inflation fell for the third month in a row.
2. Mar-23: Turmoil in the banking sector sent shivers across global markets with regulators intervening swiftly. China sets its growth target for the year, the lowest in more than three decades. Central banks continue to raise interest rates to combat inflation.  
3. Apr-23: Inflation remains elevated putting pressure on central banks to continue hiking interest rates. Meanwhile, economic signals suggest a slowdown in manufacturing whilst services remains strong. Recent data from China suggests its economic recovery remains strong.
4. May-23: Central banks continued to raise interest rates to fight inflation. Whilst inflation has begun to slow down, it is proving stickier than expected. Whilst China’s economy enjoyed a robust start to 2023 as their economy reopened and consumers unleashed their spending power, the recovery is beginning to fizzle out.
5. Jun-23: Whilst inflation appears to be falling, it is proving to be stickier than expected. The US Federal Reserve paused from raising interest rates, whilst the Bank of England raised interest rates by 0.5% points.  Elsewhere, the Eurozone entered a minor recession.
6. Jul-23: The US Federal Reserve and European Central Bank raised interest rates by 0.25% points to combat stubbornly high inflation. UK inflation fell more than expected, however, the market expects the Bank of England to continue raising rates.
7. Aug-23: US Inflation ticked up, raising concerns that the Fed may have to keep rates higher for longer. UK inflation dropped, reflecting falling energy prices. China’s economy continues to slow in the face of a property slump and weak consumer confidence.
8. Sep-23: With inflation showing signs of slowing down, the Federal Reserve and the Bank of England decide to not raise interest rates this month. Investors worry that despite the pause, interest rates are likely to remain higher for longer. 
9. Oct-23: Global markets endured a difficult month due to fears that the Federal Reserve will keep rates higher for longer. The escalating conflict in the Middle East also raised concerns that inflation may remain high after oil prices rose 6%. Hotter-than-expected inflation in the UK fuelled speculation that the Bank of England may keep rates higher for longer.
10. Nov-23: Inflation is falling in the world’s major economies, leading economists to believe that central banks have stopped hiking interest rates and may start cutting in 2024. News of falling inflation was welcomed by investors, with markets in the US, UK and Europe all seeing positive returns in November.
11. Dec-23: Markets ended the year positively in the US, UK and Europe. Investor optimism is growing, fuelled by held interest rates and expectations of cuts in 2024. China’s economic woes continue as it yet again slipped into deflation.
12. Jan-24: Investors reassess their expectations for interest rates as central banks warn against early interest rate cuts. Bonds fell in value, while stock market returns varied led by Japanese equities delivering a return of over 8%. Economies and labour markets continue to show resiliency. 

If you are invested in a range of funds within your portfolio these are likely to be spread across different regions of the world and, depending on your attitude to risk, a range of different assets. This diversification reduces the impact on performance of any individual event like the coronavirus crisis. We take a long-term approach to investing, and we do not let short-term events force us into making decisions about how we manage your portfolio.

Robert Jeffree

Chief Investment Officer
Omnis Investments