Monthly Market Review – January 2023


Year 2023 started on a positive note with the renewed hopes that inflation outlook is softening, policy rates might be peaking soon, or the Fed pivot might be on the cards towards the end of 2023, and China opening from the longstanding zero-covid policy restrictions. This optimism helped all asset classes to close the first month of the year positively with equities outperforming all other asset classes. Fed’s softening tune encouraged markets’ participants to re-evaluate what will be the level of terminal interest rates in 2023, how long will rates remain high, when will the Fed pivot, and how hard will be the impact of recession, if any, on the economies and corporate earnings.

Global equities were the best performing asset class as S&P 500 surged over 6% in January, recovering much of the losses of the previous month (December 2022), however, UK broad market index, FTSE 100, soared 3%. The US equity market barometer dropped 11.54% in 1 year while UK FTSE 100 achieved 2.58% in the same period. Dow Jones Islamic Market Index climbed 7.5% in January but fell 12.57% year-over-year. Gold was the second-best asset class and proved its solidity again in January with 5.69% price surge, and 6.69% year-over-year. Crude oil increased 2.22%, however, commodities were the worst performer among all asset classes to end the month marginally positive.

Market Snapshot

Data Source: S&P Global, Yahoo Finance, Tradingeconomies

News & Key Events in January


• Annual inflation rate in the UK fell to 10.5% in December of 2022 from 10.7% in November, matching market forecasts. It marks a second consecutive month of slowing inflation and the lowest rate in three months, after a peak of 11.1% in October.

• Retail sales in the UK sank 1% month-over-month in December of 2022, following an upwardly revised 0.5% drop in November and compared to market forecasts of a 0.5% rise.

• The British economy contracted 0.3% on quarter in the three months to September of 2022, slightly more than a preliminary estimate of a 0.2% drop.


• The annual inflation rate in the US slowed for a sixth straight month to 6.5% in December of 2022, the lowest since October of 2021, in line with market forecasts. It follows a 7.1% reading in November.

• The US economy expanded an annualized 2.9% on quarter in Q4 2022, following a 3.2% jump in Q3 and beating forecasts of 2.6%.

• The S&P Global US Manufacturing PMI increased to 46.8 in January of 2023 from 46.2 in December, beating market forecasts of 46, preliminary estimates showed. Still, the reading continued to point to another contraction in factory activity which was the second-fastest since May 2020 as manufacturing demand conditions remained subdued.


• Annual inflation rate in the Euro Area fell to an eight-month low of 8.5% in January of 2023 from 9.2% in December, below forecasts of 9%, preliminary estimates showed.

• The S&P Global Eurozone Manufacturing PMI was confirmed at 48.8 in January 2023, up from 47.8 in the previous month and pointing to the weakest pace of contraction in the sector since last August. New orders continued to fall, but at a rate that was the softest since May 2022, with new export business dropping for an eleventh month in a row.

• The Eurozone economy grew slightly by 0.1% in the final quarter of 2022, easing from a 0.3% expansion in the previous three-month period but beating market consensus of a 0.1% contraction, a preliminary estimate showed.

• Germany’s GDP shrank by 0.2% on quarter in the final three months of 2022, following an upwardly revised 0.5% expansion in the previous period and defying market expectations of stagnation, a preliminary estimate showed.


• China’s annual inflation rate rose to 1.8% in December 2022 from November’s eight-month low of 1.6%, in line with market consensus.

• The Chinese economy unexpectedly showed no growth on a seasonally adjusted basis in the three months to December of 2022, compared with market consensus of a 0.8% contraction and after a 3.9% expansion in the third quarter.

• The Caixin China General Manufacturing PMI edged up to 49.2 in January 2023 from December’s 3-month low of 49.0 but less than market consensus of 49.5. This was the sixth straight month of drop in factory activity, amid sluggish operations after an abrupt shift in COVID policy.


• The annual inflation rate in Japan rose to 4 % in December 2022, the highest since January 1991 amid a rise in prices of imported raw commodities and yen weakness.

• Russia’s GDP shrank by 3.7% year-on-year in the third quarter of 2022, revised lower from preliminary estimates of a 4% contraction slightly lower than the Central Bank of Russia’s forecast of 4%.

• The Canadian economy expanded 0.7% on quarter in Q3 2022, a fifth consecutive quarter of growth, and following a 0.8% increase in Q2.

• Russia’s GDP shrank by 3.7% year-on-year in the third quarter of 2022. The annual inflation rate in Russia fell to 12% in November of 2022 from 12.6% in the previous month, slowing for the seventh consecutive month to the lowest since the country’s attack on Ukraine in February triggered sweeping sanctions from Western states.

• The annual inflation rate in Russia fell to 11.9% in December of 2022 from 12% in the previous month, slowing for the eighth consecutive month to its lowest since the country’s invasion of Ukraine in February triggered sweeping sanctions that isolated Russia’s economy.

• The annual inflation rate in Australia climbed to 7.8% in Q4 of 2022 from 7.3% in Q3 and above market forecasts of 7.5%. This was the highest print since Q1 1990, boosted by rising costs of food, automotive fuel, and new dwelling construction.

• Canada’s annual inflation rate fell to 6.3% in December of 2022, the least since February 2022 and below market expectations of 6.4%, compared to the 6.8% in November and further declining from the 1983-high of 8.1% from June.


Data as at 31 January 2023. Past performance is not a reliable indicator of current or future returns. This overview contains general information only and does not consider individual objectives, taxation position or financial needs. Nor does this constitute a recommendation of the suitability of any investment strategy for a particular investor. It is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy to any person in any jurisdiction in which such an offer or solicitation is not authorised or to any person to whom it would be unlawful to market such an offer or solicitation.