January 2023 Market Commentary
Festivities came late to financial markets this year with the seasonal equity market rally starting on January 3rd. The month of January proving to be very positive for equity assets both locally and globally. Soft inflation data and dovish central bank commentary helped elevate both share markets and long duration government bonds, a reversal of much of the price action of 2022.
In January, the best performing asset class was Australian Equities (+6.3%), with global equities (+4.8%) and domestic bonds (+2.6%) not far behind. The biggest surprise was a rebound in the more speculative growth/tech sector of the stock market, after suffering a torrid 2022.
What comes next? Markets currently sit at a critical juncture for growth orientated assets, as the macro picture remains mixed. Strong employment data and some significant contributors to inflation (notably services, travel and flights) contrast against weak retail sales and softness in the prices of goods and energy markets. We remain cautiously optimistic that central banks should be able to negotiate the transitioning inflationary environment without causing too much damage to the wider economy, however a degree of ongoing volatility in asset prices is likely in the short term. The key over the next few months will be dynamic portfolio management with a strong risk focus. We are currently positioned conservatively across the portfolios, with one eye on taking opportunities in equities as they arise.
TWD SMA Portfolios
All TWD SMA portfolios posted strong returns over January 2023, between +2.3% (Conservative) and +3.8% (Aggressive). Contributors to returns were broad based, with most holdings contributing across defensive and growth assets. Adbri, Aristocrat Leisure, and IDP Education were particular highlights amongst the stocks. Global property manager Resolution Capital, and much of the longer duration fixed income managers, performed well amongst the funds held.
The contents of this publication are only intended to provide a summary and general overview of matters of interest in the financial markets and in the economy and are distributed in order to promote broad discussion. The publication does not constitute investment or financial product advice, it does not constitute an offer or invitation to purchase a financial product or financial service, nor does it of itself create a client-financial adviser relationship. To the extent that any part of the contents of this publication may be said to constitute “general advice” we warn you not to act on any matter referred to in this publication without first seeking qualified financial product advice appropriate to your particular circumstances, needs and objectives before acting or relying on any content in this publication. TWD Licensee Services Pty Ltd (ABN 88 605 064 480 – AFSL 475964) makes no warranties or representations about the accuracy or completeness of the content of this publication, and excludes, to the maximum extent permissible by law, any liability which may arise as a result of the use of the content of this publication.