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D-PIMS Weekly Market Update - Week of 16th to 22nd January 2023

Today’s Monday update:

Over the course of last week, market moving headlines were mostly related to economic and political matters:

• On Monday, clothing and food retailer Marks & Spencer plans to open 20 new, bigger stores in its 2023-24 year as part of a radical overhaul of its store estate that will see it invest £480 million. The 139-year old group said on Monday the investment would generate more than 3,400 new jobs across the UK. M&S's move shows the continuing importance of physical stores to retailers despite the rise of online shopping over the last two decades. M&S and fellow clothing retailers Next and JD Sports Fashion have all highlighted a post-pandemic swing from online shopping back to physical shopping in the Christmas trading period.

• On Tuesday, China's population fell last year for the first time in six decades, a historic turn that is expected to mark the start of a long period of decline in its citizen numbers with profound implications for its economy and the world. The country's National Bureau of Statistics reported a drop of roughly 850,000 people for a population of 1.41175 billion in 2022, marking the first decline since 1961, the last year of China's Great Famine. Much of the demographic downturn is the result of China's one-child policy imposed between 1980 and 2015 as well as sky-high education costs that have put many Chinese off having more than one child or even having any at all.

• On Wednesday, British consumer price inflation fell to a three-month low of 10.5% in December, offering some comfort to the Bank of England and households, but food and drink prices continued to accelerate, rising at the fastest pace since 1977. The drop in the headline rate of inflation from 10.7% in November was in line with economists' forecasts in a Reuters poll, and moves CPI further away from the 41-year high of 11.1% struck in October.

U.S. Treasury Secretary Janet Yellen agreed with Chinese Vice Premier Liu He to enhance communication about macroeconomic and financial issues during a "candid, substantive, and constructive" meeting in Zurich on Wednesday, the Treasury said. In a statement, the Treasury said both sides agreed to enhance cooperation on climate finance on a bilateral and multilateral basis, such as within the United Nations, Group of 20 economies and APEC. "While we have areas of disagreement, and we will convey them directly, we should not allow misunderstandings, particularly those stemming from a lack of communication, to unnecessarily worsen our bilateral economic and financial relationship," Yellen said at the start of the meeting. Liu said both countries need "serious communication" and coordination on issues including climate change and the economy, and that he was ready for an in-depth exchange. "We do believe that we have to always bear in mind the bigger picture, try to manage our differences appropriately and seek common ground," Liu said, speaking through an interpreter. "In this way, hopefully we can work together to maintain the overall stability of Chinese-U.S. relations."

• On Thursday, Trains ground to a halt in France on, schools were shut and refinery shipments blocked as workers walked off their jobs in an attempt to derail the government's plans to raise the retirement age by two years to 64. The nationwide day of strikes and protests is a major test for President Emmanuel Macron, who says his flagship reform, which opinion polls show is very unpopular, is vital to ensure the pension system does not go bust. The challenge for unions is whether they can transform that opposition to the reform - and anger with a cost-of-living crisis - into a mass social protest that would eventually force the government to change its plans.

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labour market remains tight despite higher interest rates. Initial claims for state unemployment benefits dropped 15,000 to a seasonally adjusted 190,000 for the week ended 14th January, the Labour Department said on Thursday. Economists polled by Reuters had forecast 214,000 claims for the latest week.

• Over the week, the main global stock markets were down, except Japan and China. The UK and US were down the most, on the back of recession and rising interest rate fears. Over the week, all the D-PIMS portfolios were down, especially the higher risk portfolios. The portfolios were helped by some Absolute return and China holdings.

The value of investments and the income from them can fall as well as rise and you may not get back the original amount you invested.

Past Performance is no guarantee of, or guide to future returns.

The comments made above represent our interpretation of events and market views and are in no way a guarantee of future investment performance.