Strong Performance Despite the Lows


Strong Performance Despite the Lows

Sunday, April 23, 2023 By Vincent David-Robin

Last week was relatively uneventful in terms of major data releases; other than the UK, where inflation remained above 10% and retail sales remained weak. The causality between these two indicators is clear, as high inflation reduces consumers' purchasing power, leading to lower retail sales.

Equity markets also remained flat, with the US down 0.5% and Europe up 0.5% on average. Most Asian were markets down 1% to 2% except for Japan, which was up 1%. However, what is noteworthy is that European and US (Dow Jones) markets are at or close to all-time highs while Asian markets – particularly China – have staged a strong recovery.

Corporate Earnings Remain Sub-Par

Despite the positive performance of the markets, corporate earnings are not expected to be at all-time highs. What this indicates is a Price-to-Earnings (P/E) ratio expansion, which is the result of bullish bets after the added liquidity and support provided by central banks.

Tricky Investing Environment

The investing environment, therefore, becomes a bit tricky with bullish momentum against relatively expensive valuations. Investors need to tread cautiously and weigh the risks and rewards carefully. While the liquidity provided by central banks has helped boost the markets, it has also inflated valuations, making some investments relatively expensive.

General disclosure:This material is intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Aria Capital Management or any of its related companies to participate in any of the transactions mentioned herein. This material may contain estimates and forward-looking statements, which may include forecasts and do not represent a guarantee of future performance. This information is not intended to be complete or exhaustive and no representations or warranties, either express or implied, are made regarding the accuracy or completeness of the information contained herein. The opinions expressed are subject to change without notice. Reliance upon information in this material is at the sole discretion of the reader. Investing involves risks. Past performance does not guarantee future results. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.


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