January 2023

• Global markets began 2023 strongly as slowing inflation data and hopes for less aggressive central bank tightening improved investor sentiment.
• Technology and growth stocks rebounded sharply following heavy losses throughout 2022.
• China's reopening following the end of zero-COVID restrictions boosted optimism regarding global growth and commodity demand.
• Bond yields declined modestly as investors anticipated that inflation had peaked in several major economies.
• Emerging markets outperformed due to improving Chinese growth expectations and weaker U.S. dollar conditions.
• Commodity prices delivered mixed performance amid balancing growth optimism and recession concerns.

Asia (ex. Japan)

Asian markets outside Japan performed strongly during January as investors welcomed China's reopening and improving regional growth expectations. Consumer, travel and technology sectors benefited particularly from optimism surrounding recovering Chinese demand.

Technology exporters such as Taiwan and South Korea also rebounded sharply alongside improving global sentiment toward growth sectors and expectations for stabilising semiconductor demand later in the year.

Europe

European equities advanced strongly during January as energy prices declined significantly from 2022 highs and recession fears eased across much of the region.

Milder winter weather and improved gas storage conditions reduced concerns regarding severe energy shortages, while investors responded positively to signs of moderating inflation and resilient economic activity.

United States

U.S. equities rallied strongly during January as inflation data continued moderating and investors anticipated that the Federal Reserve could soon slow or eventually pause interest rate increases.

Technology and growth sectors significantly outperformed as Treasury yields declined and risk appetite improved following the difficult market conditions experienced during 2022.

United Kingdom

UK equities delivered positive performance during January as easing energy prices and improving global sentiment supported investor confidence.

Financial and commodity sectors remained relatively resilient, though economic growth concerns and persistent inflation continued weighing on the domestic outlook.

Japan

Japanese equities advanced during January as improving global sentiment and expectations for stronger Chinese demand supported exporters and manufacturing sectors.

Investors continued monitoring potential future policy changes at the Bank of Japan following December’s unexpected adjustment to yield curve control measures.

Emerging Markets

Emerging markets performed strongly during January as weaker U.S. dollar conditions, declining bond yields and optimism surrounding Chinese reopening encouraged investor inflows.

Asian economies particularly benefited from improving regional growth expectations and stronger trade prospects linked to China's recovery.

Commodities

Commodity prices delivered mixed performance during January. Industrial metals strengthened due to expectations for stronger Chinese demand and improving global manufacturing sentiment.

Oil prices remained relatively stable as investors balanced reopening optimism against lingering concerns regarding slower growth in Europe and the United States, while gold prices advanced due to declining bond yields and weaker dollar conditions.