Monthly Market Review – March 2023


The world economy and financial markets continue to face uncertainties as inflation remains elevated and interest rates rise to counter high inflation. In march, the news from the banking sector came to fore when Silicon Valley Bank (SVB) faced a bank run. A contagion effect emerged after the panic and few other banks felt the pain as well. Here is an article detailing what went wrong with SVB. Financial markets observed heightened volatility as investors started to think about a possible contagion in the banking system triggering a financial crisis similar to the Global Financial Crisis (GFC) of 2008. As expected, the regulator intervened to dampen investor concerns, nevertheless, it is still very early to say anything about the health of the financial markets as the monetary tightening cycle is expected to continue for the near future.

Gold was the best performing asset with 7.21% return in the month of March, mainly due to adverse news from the banking sector. Equity markets, particularly US equities, rallied later in the month amid reducing the stress and panic after banking sector worries. The S&P 500 surged 4% while DJ Islamic Markets Index increased by 5.61%. DJ Sukuk index was up 1.29%. However, UK broad market index FTSE 100 and China’s Shanghai index dropped 3.6% and 1.2%, respectively. Europe’s Stoxx 600 remained little changed perhaps due to worries created by the forced marriage of Credit Suisse bank with UBS by the Swiss regulator. Commodities did not do well in March with crude oil and DJ Commodity Index dropping by 2.78% and 0.26%, respectively.

Market Snapshot

News & Key Events in March


• The Bank of England raised its key bank rate by 25bps to 4.25% during its March 2023 meeting, in line with expectations, and pushing borrowing costs to fresh 2008-highs, aiming to bring inflation back to the 2% target.

• Annual inflation rate in the UK unexpectedly edged higher to 10.4% in February of 2023 from 10.1% in January, the first increase in four months and compared to forecasts of 9.9%.


• The Fed raised the fed funds rate by 25bps to 4.75%-5% in March 2023, matching the February increase, and pushing borrowing costs to new highs since 2007, as inflation remains elevated.

• The annual inflation rate in the US slowed to 6% in February of 2023, the lowest since September of 2021, compared to 6.4% in January.

• The US economy expanded an annualized 2.6% on quarter in the last three months of 2022.


• The ECB raised interest rates by 50 bps to 3.5%, further pushing borrowing costs to the highest level since late 200.

• The consumer price inflation rate in the Euro Area eased to 6.9% year-on-year in March 2023, its lowest level since February 2022.

• The Eurozone economy showed no growth in the final quarter of 2022.

• Germany’s consumer price inflation eased further to 7.4% year-on-year in March 2023, down from 8.7% in the previous two months.

• The German economy shrank 0.4% on quarter in the last quarter of 2022, much worse than initial estimates of a 0.2% decline, marking the first drop in GDP in nearly two years.


• The People’s Bank of China (PBoC) kept its key lending rates steady for the seventh straight month at March fixing, as widely expected. The one-year loan prime rate (LPR), which the medium-term lending facility uses for corporate and household loans, was left unchanged at 3.65%; while the five-year rate, a reference for mortgages, was maintained at 4.3%.

• China’s annual inflation rate fell to 1% in February 2023 from 2.1% in the prior month. This was the weakest print since February 2022, with prices of both food and non-food easing sharply, as consumers stayed cautious despite the removal of zero-COVID policy.

• 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 annual inflation rate in Japan fell to 3.3% in February 2023 from January’s 41-year high of 4.3%.

• The Japanese economy stagnated quarter-on-quarter in the three months to December 2022, compared with a 0.3% contraction in the previous period.

• The annual inflation rate in Russia fell to 11% In February of 2023 from 11.8% in the previous month, the lowest since the start of Russia’s invasion of Ukraine and under market expectations of 11.2 percent.

• 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 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%.

• The annual inflation rate in Canada fell to 5.2% in February of 2023, the least since January 2022, below market expectations of 5.4% and slowing from the 5.9% in the previous month amid significant base-year effects.


Data as of 31 March 2023. This article is for information only. Please do not act based on anything you might read in this article. 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.