Market Overview & Outlook Quarter 3 2023 (1 July – 30 September 2023) – ‘Higher for Longer’

Equity Markets

August and September are notoriously poor performing months, having been the two worst-performing months for over 50 years. Following suit, the bullish sentiment that pulled stocks out of the fire, that is a bear market, has begun to show signs of slowing down. Evidence of a sell-off across the markets was present during Q3. Whilst many had expected the US Federal Reserve to begin the interest rate descent in the second half of the year, instead the catchphrase ‘higher for longer’ seems to have become the latest buzzword to grace the investment world.

Whilst all major equity indices are broadly flat, or have lost slight ground over the quarter, in local currency terms, it is the UK’s FTSE 100 that has performed strongest showing gains of +2.19% over the period. The UK’s Bank of England skipped the opportunity to further increase interest rates in September, from their last 0.25% rise in August, with the Bank of England stating that ‘previous increases in interest rates are working to bring down inflation.’

Bond Markets

With interest rates remaining ‘relatively’ high, but with market sentiment suggesting rates are due to fall in the longer term, the 2 and 10-year yield curve remains inverted in developed regions. As such, short term corporate and government debt instruments, in conjunction with money market funds, continue to receive inflows as investors look to mitigate higher duration interest rate risk.

Macroeconomic Environment

Oil prices over the quarter soared over fears of lack of global supply. The Bloomberg WTI Crude Oil index jumped +31.75% during this period, pushing the price per barrel close to USD$100. Following the sale of oil at much lower prices by the US in 2022, stockpiles remain low and hit critical levels in September. As regions of the globe head towards the winter months, an increased demand in energy adds to inflation pressure.


It’s important to put any quarterly market review into a longer-term perspective, and with that in mind we have witnessed strong resilience since the turn of the year. Moving into the final months of 2023, volatility is likely to persist, but central banks appear to be gaining a tighter grip on their tussle with inflation and we anticipate inflation to continue to decline in Q4 and into 2024.

Please note, our Market Overview & Outlook is our view of markets and does not constitute investment advice. Past performance is not necessarily an indication of future returns; the value of investments and any income from them is not guaranteed and can fall as well as rise. Overseas investments are affected by currency movements and exchange rates. If you would like investment advice on your individual circumstances, please do not hesitate to get in touch, telephone 01392 875500,

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