Reviewing a positive start for markets in 2023

By TP Financial Solutions

01 Jun 2023

TP Financial Initial Photos Web Quality -4.jpg.jpg

Following a positive start for markets in quarter one, our chief investment officer, Marcus Brookes shares why our cautious optimism has begun to deliver returns for investors this year. 

1. Market Review

Despite the sudden calamity in the banking sector, investors quickly recovered their poise in the first quarter with European equities and major technology stocks enjoying the big gains.

Meanwhile, although central banks in the US, UK, Europe and Switzerland all continued to raise interest rates, expectations that the current interest-rate hiking cycle is coming to an end helped bond markets to also deliver solid returns.

We were cautiously optimistic coming into the year and our investors were rewarded for this. Returns from equity markets were in solid single digits with Europe delivering north of 9%. This was broadly in line with our expectations. What was more unexpected, but very welcome, was that bond markets also delivered low single-digit returns. This is because inflation has remained consistently higher than expected - not an environment in which bonds usually do well.

2. Reasons to be cautious

We think this economic cycle has reached the end of its growth phase and that a shallow recession lies in wait for later in 2023. Although we are tempering our enthusiasm for riskier assets slightly, and reducing risk in the portfolios here and there, our caution is also tempered.

Looking forward, we suspect that the coming economic recession will not ne as severe as originally predicted, and while we'll all feel a little more worse off, it won't feel anything like the recessions of the past.

Another reason for caution is that corporate profits are also close to their peak for this economic cycle. This usually means that equity allocations begin to struggle but that bond returns pick-up because they're a bit more defensive.

3. Reasons to be optimistic

Although inflation has proved stickier than expected, there may only be one or two interest-rate rises to come out of the US and the UK, however, it remains to be seen whether central banks have done enough to stem inflation.

This is because central bankers are always playing catch up, namely enacting policy today in reaction to events that happened last year.

Our reading of the situation is that central banks have probably done the heavy lifting now and that financial markets remain intact. We're still optimistic that corporate profits will remail relatively high, supported by high levels of employment.

Economic growth will probably slow, rather than grinding to a halt, while the promise of interest-rate cuts as we approach 2024 will likely see markets flourish once more. 

"...it was good to see both sides of our portfolios: equities, which provide the growth element, and bonds which provide the defensive element, doing well against a turbulent backdrop." - Marcus Brookes, Chief Investment Officer. 

Top three things to remember in today's investment landscape

  1. Always speak to your financial adviser first if you're unsure about how best to approach investing at the moment. They'll be able to provide you with their expertise before you make a decision.
  2. Market volatility is front of mind because of considerable news coverage. This can make the risks feel more significant. A diversified portfolio can manage some of these risks and provide real opportunities for growth.
  3. Keep your personal financial plan and investing goals at the front of your mind. Now is a good time to focus on the long-term, and use you investments to help mitigate the effects of inflation.

Important information

Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments and the income from them may go down as well as up and investors may not get back any of the amount originally invested. Because of this, an investor is not certain to make a profit on an investment and may lose money. Exchange rate changes may cause the value of overseas investments to rise or fall.

This communication is issued by Quilter Investors Limited ("Quilter Investors"), Senator House, 85 Queen Victoria Street, London, United Kingdom, EC4V 4AB. Quilter investors is registered in England and Wales (number: 04227837) and is authorised and regulated by the Financial Conduct Authority (FRN: 208543).

This communication is for information purposes only. Quilter Investors uses all reasonable skill and care in compiling the information in this communication and in ensuring its accuracy, but no assurances or warranties are given. You should not rely on the information in the communication in making investment decisions. Nothing in this communication constitutes advice or personal recommendation.

Any opinions expressed in this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or companies within the same group as Quilter Investors as a result of using different assumptions and criteria.

Data from third parties ("Third-Party Data") may be included in this communication and those third parties do not accept any liability fir errors and omissions. Therefore, you should make sure you understand certain important information, which can be found at www.quilter.com/third-party-date/. Where this communication contains Third-Party Data, Quilter Investors, cannot guarantee the accuracy, reliability or completeness of such Third-Party Data and accepts no responsibility or liability whatsoever in respects of such Third-Party Data.

Quilter Investors is not licensed or regulated by the Monetary Authority of Singapore ("MAS") in Singapore. This document has not been reviewed by MAS.

QI 26225/28/3398

Latest news

1

Construction begins on new Civil Service office building in Talbot Gateway Alan McBride Muse Will Town Defence Infrastructure Organisation Jennifer Chard Defence Business Services Cllr Lynn Williams Blackpool Council Garry Bowker Vinci

Construction begins on new Civil Service office building in Talbot Gateway

20 May 2025

2

Skiddle raises over £750,000 for charities Skiddle cheque presentation to Alder Hey Hospital

Skiddle raises over £750,000 for charities

20 May 2025

3

Former Victorian Hotel approved for residential conversion The site

Former Victorian Hotel approved for residential conversion

19 May 2025

4

REVOLUTION PARK: Work starts on Darwen’s new home of advanced manufacturing Oliver Webber, Tracy Clavell-Bate and Tim Webber from Barnfield Group with Cllr Phil Riley, second from right, Leader of Blackburn with Darwen Council

REVOLUTION PARK: Work starts on Darwen’s new home of advanced manufacturing

19 May 2025

5

Two Cuckoo Gins named winners in The Gin Guide Awards 2025 Mark Long

Two Cuckoo Gins named winners in The Gin Guide Awards 2025

19 May 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV122 May/June Launch Event
121 Lancashire Business View Magazine Launch
Networking
21 May 2025

LBV122 May/June Launch Event

Lancaster and Morecambe College, Lancaster, LA1 2TY

08:30 - 10:30

Sub36 Networking
Networking
11 Jun 2025

Sub36 Networking

British Jewellery School, Scorton, PR3 1BA

15:00 - 17:00

Lancashire Net Zero Carbon Conference
Net Zero Carbon Social 1200pxtrident 2
Networking
18 Jun 2025

Lancashire Net Zero Carbon Conference

Crow Wood Hotel & Spa Resort, Burnley, BB12 0RT

08:30 - 13:00

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
02 Apr 2025 - 08 Oct 2025

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 15:30

Preston Freelancer Meet-Up: May
Freelancer Meet-Up May.png.png
LBV Hub Networking
22 May 2025 - 22 May 2025

Preston Freelancer Meet-Up: May

society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Amber River True Bearing quarterly investment seminar
LBV Hub Seminars
22 May 2025 - 22 May 2025

Amber River True Bearing quarterly investment seminar

Cottons Hotel & Spa , Knutsford, WA16 0SU

16:00 - 18:00

The Business Network Central & East Lancashire
LBV Hub Networking
22 May 2025 - 22 May 2025

The Business Network Central & East Lancashire

Mytton Fold, Langho, BB6 8AB

11:30 - 14:15

Liverpool Business Expo 2025
https---cdn.evbuc.com-images-881365363-4862066883-1-original.20241023-085714.jpeg.jpg
LBV Hub Awards
23 May 2025 - 23 May 2025

Liverpool Business Expo 2025

Aintree Racecourse , Liverpool , L9 5AS

09:00 - 15:00

Advantage: AI – A Workshop for Business Leaders – May 29
Artboard 15.png.png
LBV Hub Seminars
29 May 2025 - 29 May 2025

Advantage: AI – A Workshop for Business Leaders – May 29

Door4 Office, Burnley Wharf, Manchester Road, Burnley, BB11 1JG

09:00 - 11:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin