July 21st, 2023

Your May and June global market update

As the second half of 2023 arrives, now is an apt time to review market movements for the past two months – and indeed for the first half of the year.

Since the bank collapses in the US and Europe we discussed in our March and April global market update, many global equities have risen in May and June. After the “storm” 2022 brought to markets, the first half of 2023 has seen somewhat calmer waters, although some regions are still experiencing volatility as the year progresses.

Read on to find out how global markets performed in March and April 2023, and what these movements could mean for your investments.


Although global indices have mostly posted positive returns across May and June, UK equities fell over these two months. JP Morgan reports that the UK FTSE All-Share index saw -0.5% growth over the second quarter (April, May and June) of 2023.

The reasons for this slight dip in value are largely rooted in UK inflation, which remains stubbornly high at 7.9% as of June 2023, the Office for National Statistics (ONS) reports.

The UK’s case of “sticky” inflation has prompted the Bank of England (BoE) to implement two further interest rate hikes in May and June, bringing the base rate to 5%.

Worry over rising inflation and interest has curbed investors’ enthusiasm – although it is notable that the technology sector has stood out from the rest, seeing a significant uptick in these past two months.

What’s more, it seems that the BoE has more to do to take control of the inflationary situation – meaning that unfortunately, we may not have seen the end to interest rate hikes yet. Consequently, gilts and bonds are likely to continue to fare poorly – these mostly perform inversely to rising interest rates – which is important to note for investors with a significant stake in this type of asset.

Looking ahead to the rest of 2023, the Confederation for British Industry (CBI) reports that the British economy has grown more favourably than expected in the first half of the year, and may “steer clear of a recession” after all.

While this is only a forecast, the immediate future of the British economy could be brighter than anticipated after a difficult year in 2022.


In positive news from the US, markets performed favourably in this region across May and June, with the US S&P 500 closing at 8.7% on 30 June.

Importantly, US inflation grew to just 3% in the year to June 2023 – its lowest level since March 2021. This slowdown could have been caused by declining energy prices across the US; according to Trading Economics, the cost of energy decreased by 16.7% in June, a significant jump from its 5.1% drop in April.

In addition to this welcome news, the US economy grew by 2% in the first quarter of 2023, and did so again by 2.1% in Q2.

All this comes in light of the fact that the Federal Reserve (Fed) continually raised interest since the pandemic – in much the same vein as the BoE in the UK – but paused these hikes over May and June.

As our discretionary fund managers (DFMs), Brooks Macdonald, put it in their insights: “The decision to temporarily halt interest rate hikes is well-timed and reflects the Fed’s confidence in the trajectory of inflation towards its long-term target of 2%. There is no immediate need for another wave of aggressive hikes that could potentially disrupt the delicate balance of economic growth.”

Despite this influx of relieving news from the US, the Swiss Re Group reports that a recession is expected to hit the US in the second half of 2023. While interest rate hikes have slowed inflation, GDP growth is forecast to grind to a halt. This may reflect the “weakened sentiment” in the country, and could affect markets down the line.


Against the backdrop of Russian turmoil and a large bank collapse, the Eurozone has just about held onto positive economic growth in the first half of 2023.

European markets posted favourable returns at the end of Q2 2023, with the MSCI Europe (excluding UK) seeing 3% growth at the end of the quarter. The index dipped by -2.5% in May but recovered quickly throughout June.

Although this is positive news, this recovery is somewhat meagre compared with the performance of US indices. The jury is still out as to whether European inflation will fall permanently; according to Trading Economics, the Eurozone saw a 6.2% inflation rate in April, which is reported to have risen to 6.5% in May 2023, then dipped again to 5.5% in June.

GDP growth is also reported to have been just 0.1% in Q1 2023. The European region is teetering on the edge of a recession, with Germany already reported by Reuters to have experienced recessionary conditions in Q1.


The MSCI Asia (excluding Japan) index saw a downswing of -1.1% in Q2 2023. Meanwhile, the Japan TOPIX saw a significant uptick, ending June 2023 with 14.4% positive equity.

After China’s economy fully reopened at the start of the year, investors were optimistic. Nevertheless, this upswing in positivity has dwindled in May and June, resulting in low economic growth in May. What’s more, Thai, Indonesian, and Singaporean share prices declined in May, Schroders reports.

Conversely, Japanese stock prices have soared in the past two months, as foreign investors increased the momentum behind the technology sector there.

Working with a financial planner can help you create an investment portfolio that suits your goals

For investors in US and UK markets, Brooks Macdonald warn that we can expect “an extended period of volatility in the fixed income space”. As interest rates remain high as a means of combating inflation, a portion of your portfolio may continue to experience downturns throughout 2023.

While there is no need to panic, it may be helpful to work with your financial planner to ensure your investment portfolio is well-diversified. This could help you feel calmer about the volatility your investments might experience in the coming months.

We can answer any questions you have about what you’ve read in this article, and help you create an investment portfolio that matches your needs.

Get in touch

For a discussion about your long-term financial goals, email enquiries@prosserknowles.co.uk or request a callback from one of our advisers.

Please note

This article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

The value of your investment can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

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