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D-PIMS Weekly Market Update - Week of 2nd to 8th January 2023

Today’s weekly update:

Over the course of last week, shortened by the Bank Holiday, market moving headlines were mostly related to economic, Covid and Ukraine matters:

• On Wednesday, market researcher Kantar said that British grocery sales rose 9.4% to a record £12.8 billion in the four weeks to 25th December, though growth was driven by price inflation rather than increased purchasing. Kantar said grocery price inflation was 14.4% in December, down from 14.6% in November, “this is the second month in a row that grocery price inflation has fallen, raising hopes that the worst has now passed," Kanter said.

Global health officials tried to determine the facts of China's raging COVID-19 outbreak and how to prevent a further spread as the Communist Party's newspaper on Wednesday rallied citizens for a "final victory" over the virus. China's axing of its stringent virus curbs last month has unleashed COVID on a 1.4 billion population that has little natural immunity having been shielded from the virus since it emerged in the central city of Wuhan three years ago. Many funeral homes and hospitals say they are overwhelmed, and international health experts predict at least one million deaths in China this year, but China has reported five or fewer deaths a day since the policy U-turn. China has rejected international scepticism of its statistics as politically motivated attempts to smear its achievements in fighting the virus.

• On Thursday, The number of Americans filing new claims for jobless benefits dropped to a three-month low last week while layoffs fell 43% in December, pointing to a still-tight labour market that could force the Federal Reserve to keep hiking interest rates. Initial claims for state unemployment benefits decreased 19,000 to a seasonally adjusted 204,000 for the week ended 31st December, the lowest level since the end of September. Economists polled by Reuters had forecast 225,000 claims for the latest week.

Britons spent more than expected over Christmas, Next, one of the country's biggest clothing retailers, said on Thursday in a sign that resilient shoppers helped the sector dodge a cost-of-living crisis that threatened to hit festive sales. Discounter B&M and fast-food chain Greggs also reported higher sales, showing the importance of value in straitened times.

In a phone call with Ukrainian President Volodymyr Zelenskiy on Thursday, Turkish President Tayyip Erdogan said his government was ready to take on mediation and moderation duties to secure a lasting peace between Russia and Ukraine. Vladimir Putin told Erdogan separately on Thursday that Russia was open to dialogue over Ukraine, but that Kyiv would have to accept the loss of territories claimed by Russia, the Kremlin said. United Nations chief Antonio Guterres, at an event in Lisbon, said he believed the warring sides were "far from a moment in which a serious peace negotiation is possible".

China defended on Thursday its handling of its raging COVID-19 outbreak, after U.S. President Joe Biden voiced concern and the World Health Organisation (WHO) said Beijing was under-reporting virus deaths. China's foreign ministry spokesperson Mao Ning told a regular press briefing in Beijing that China had transparently and quickly shared COVID data with the WHO. Mao said that China's "epidemic situation is controllable" and that it hoped the WHO would "uphold a scientific, objective, and impartial position".

• On Friday, Ukraine dismissed as a trick a unilateral order by Russia for a 36-hour ceasefire and the leaders of the United States and Germany said they were sending armoured fighting vehicles in a boost for the Kyiv government. Ukrainian President Volodymyr Zelenskiy rejected out of hand a Russian order for a truce over Russian Orthodox Christmas starting at noon on Friday and ending at midnight on Saturday. He said it was a trick to halt the progress of Ukraine's forces in the eastern Donbas region and bring in more of Moscow's forces.

Wall Street's main indexes rallied on Friday as a slew of economic data including cooling wages and moderation in U.S. jobs growth in December calmed worries over the Federal Reserve's rate-hike trajectory. The nonfarm payrolls rose by 223,000 jobs in December, data from the Labour Department showed, while a 0.3% rise in average earnings was smaller than expected and lower than the previous month.

• Over the first week of the year, the main global stock markets were mainly up, although Japan and India were down. China and Hong Kong were up the most, on the back of the relaxation of Covid curbs. Over the week, all the D-PIMS portfolios were well up especially the higher risk portfolios. The portfolios were helped by their China and Gold holdings.


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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.