Performance Update – June 2023

15 June 2023


Are we in a US bull market?

The S&P 500 is made up of the largest 500 companies in the US. Looking at the gains made so far this year (+8.00%), you could be forgiven to think that the US market has entered into bull market territory. This despite a number of economic issues around high inflation and slowing growth.

Since the Global Financial Crisis of 2008, technology stocks such as Apple and Amazon have achieved exponential growth. Covid also supported further gains within technology as we stayed at home. The issues around inflation however caused these stocks to fall quite considerably during 2022, as higher borrowing costs made investors nervous.

But 2023 has seen a resurgence in technology, with a large part due to Artificial Intelligence (AI). Stock market returns in technology in the US are up 63% year to date! The rest of the index is up but only around 2-3%.

Therefore it is very important to understand the makeup of the performance of the largest index in order to determine whether the world is getting more confident. We do believe that AI is clearly going to benefit these technology companies, but is for example Apple more profitable than the largest 100 companies in the UK, which its valuation suggests!?

I don’t think we have entered a bull market in equities just yet!

This data is net of fund charges but does not include potential platform costs or advisor charges which are likely to alter the overall returns set out above.

We do feel that the Fed pausing interest rates this month was a good sign that US inflation is finally becoming more manageable and forecasts do suggest the UK shouldn’t be too far off either. We don’t like to predict the way markets go, but we do think that the second half of the year should provide an easier backdrop for investors, and valuations across markets (apart from US technology stocks!) still look attractive.

Have a great few weeks everyone!

Louis Greening
Investment Specialist
Clear Financial Advice

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