Global Market Commentary April 2023

Despite banking instability and uncertain monetary policy expectations, the U.S. economy ended the quarter on a positive note. The S&P 500 Index rose 3.7% in March and 7.5% in the first quarter. The U.S. markets outperformed most major international markets. During the quarter, bond prices moved up, pushing Treasury yields in 1-year and longer maturities lower. Commodities ended negative, predominantly due to dropping energy prices. The U.S. Dollar depreciated against all major currencies except the Japanese Yen. The labor market continues to remain tight with labor demand exceeding supply. Construction activity in the economy picked up as indicated by an increase in building permits and housing starts. During the quarter, the Federal Reserve slowed down its pace of increase in policy rates. The failure of two big U.S. banks, as well as the acquisition of Credit Suisse towards the end of the quarter, has brought the Fed and investors’ attention to a potentially more challenging time for banks.

Executive summary

• Global indices recovered over the course of April as macro economic data continues to show signs of resilience.
• UK Consumer confidence rose to its highest level since February 2022 in April. This follows data released by the ONS which indicated the UK labour market continues to be at a low unemployment rate (3.8% in the period from December 2022 to February 2023) and private sector wages, excluding bonuses, grew by 6.6% in the same period.
• UK ECM activity remained broadly in-line with March as deal value only declined by 3%.
• UK public M&A activity gathered significant pace in April as thirteen new deals were announced, of which seven included a private equity offeror.

April’s key market drivers

• UK inflation decreased from 10.4% (Y/Y) in February to 10.1% (Y/Y) in March
• UK Composite PMI increased from 52.2 in March to 53.9 in April
• UK public sector net borrowing stood at £21.5bn in March, c.100% of UK GDP
• UK consumer confidence rose from -36 in March to -30 in April, reaching the highest level since February 2022
• Eurozone’s Composite PMI index rose to an 11 month high of 54.4, rising 0.7pts on the month
• The Eurozone marginally avoided a recession after growing by 0.1% (Q/Q) in Q1 2023
• The US economy grew by 1.1% (Q/Q) n Q1, a significant deceleration relative to Q4 22 where the growth rate was 2.6% (Q/Q)
• US inflation decreased from 6.0% (Y/Y) in February to 5.0% (Y/Y) in March

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