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that alone is enough to starve off depreciation provided a small level of
recession. outperformance for unhedged strategies in
At the sector level, all but two sectors, the quarter.
Financials (-2.66%) and Energy (-1.04%) In Australian dollar terms, the broader
provided a positive return. Consumer global equity market (MSCI World NR
Discretionary (+11.98%) leading the way. AUD), provided a solid gain of (9.8%) for
Spending has yet to see significant the quarter; Eurozone equities (STOXX
change however it will be hard to maintain Europe 600 NR), continued its stella short-
these levels as the full impact of this rate- term run, surging (+11.73%) during the
tightening cycle have yet to be quarter helped by a significant fall in
seen/realised. Communication Services inflation. Gas prices collapsed during the
(+9.37%) and Information Technology quarter as the March CPI dropped to
(+8.10%) also performed strongly whilst 6.9%, well down on the 10.6% peak in
Materials (+7.72%) might start to feel the October 2022; UK equities, also continued
pinch in the coming quarters as the macro their upward trajectory, with the FTSE 100
backdrop becomes more bearish. Real TR adding a further (+7.78%). This was
Estate continues to be under pressure not driven predominantly by optimism amid
helped by the SVB collapse and the risk of hopes that central banks might be in a
contagion to other small end banks and position to ‘pivot’ to cutting interest rates in
commercial property valuations. late 2023.
Across the market spectrum, the rally in In Emerging Markets (MSCI EM Index),
January rose all segments however posted another solid return for the quarter
cooling markets since have brought about helped by further overall relative
some divergence. All remained in the weakness in the USD and by China
black for the quarter with the larger caps, reopening. The re-opening of the Chinese
S&P/ASX 20 (+3.4) and S&P/ASX 100 economy and broadly, a more market-
(+3.5%), outperforming the smaller friendly policy backdrop, has fuelled a
S&P/ASX MidCap 50 (+0.01%) and large rally in Chinese equities, whilst at the
S&P/ASX Small (+1.88%). same time spilling over to Taiwan and
South Korea. The index finished the
International equities quarter up (+5.26%); The MSCI China TR
International equities also began the year rose (+6.02%) for the quarter; the broader
very strongly with gains across all regions ASEAN followed the broader EM
as the reopening of China and an movement with the MSCI AC ASEAN NR
improving inflation outlook set the tone for rising (+4.11%) led by Taiwan (+14.29%)
markets in January. Despite an extremely and Korea (+10.10%), the beneficiaries of
noisy start to the year and high levels of optimism about China. The MSCI EM
market turbulence as a result of some Latin America NR ended the quarter on a
bank collapses, all major countries/regions positive note, eking out a return of
ended the quarter in the black. (+5.23%), but underperformed broader
The S&P 500 rose a healthy (+7.36%) for EM indices.
the quarter, whilst the tech heavy Nasdaq Property & Infrastructure
shot up (+17.05%). Both indices
benefitting from the drop in real bond The Australian listed property sector
yields as investors sought longer duration (S&P/ASX 200 A-REIT), after a stirring
start to the year (up 8.12% in January),
growth assets such as Information
Technology (+21.65%) and once again fell victim to rising real bond
Communication Services (+21.27%). In yields and poor sentiment. The benchmark
index ended the quarter up a fraction
AUD terms, both indices outperformed for
the quarter, (+8.70%) and (+18.51%) (+0.52%), after falling with the broader
market in February and followed by a
respectively, which reflected the sharp sell-off in March as negative
depreciation of the Australian dollar (-
1.1%). The Australian dollar slight sentiment gripped the sector on the
demise of some foreign banks.
