Market Review: A strong first half of the year for investors
After a very difficult year for investors in 2022, the first half of 2023 has been a welcome reprieve with both equity and bond markets off to a strong start on growing economic optimism and easing inflation. US and global equity markets are firmly in positive territory year-to-date with the technology sector leading the way after an extremely difficult 2022. While still positive in the first half of the year, Canadian markets have underperformed their global counterparts owing to higher exposures to the oil and banking sectors which have struggled to start the year.
Market Performance (as of market close June 30, 20223
| Stock Markets | Year-to-Date (% Change) |
|---|---|
| S&P TSX Composite (Canadian) | 3.97% |
| MSCI USA Index (USA) | 16.16% |
| MSCI EAFE Index (International) | 9.66% |
| Bond Markets | |
| Canadian Bond (FTSE Canada Universe Bond Index) | 2.51% |
| World Bond (FTSE World Broad Investment Grade Bond Index) | 2.22% |
Markets have been resilient despite earlier concerns with the US debt ceiling and regional banking sector with several factors contributing to the strong first half performance. Inflation in both Canada and the United States fell to its lowest annual level in nearly 2 years and job creation remained robust providing optimism for a potential “soft-landing” despite the rapid rise in interest rates. Big technology companies, such as Apple, Microsoft and Nvidia Corp, contributed to much of the gains in the US market as ChatGPT took the world by storm and created optimism on the future potential of artificial intelligence applications.
What should I do?
The past couple years have highlighted the importance of having a disciplined investment strategy. It can be extremely difficult to see the value of your investment portfolio drop and, unfortunately, this leads to many investors selling their investments at the worst possible time and missing out on the eventual rebound that we have witnessed thus far in 2023. A “dollar cost averaging” strategy where you make a regular bi-weekly/monthly contribution into a well-diversified portfolio can help take some of the emotions out of play. When the markets are down, your regular contribution is buying shares “on sale”, positioning you to benefit when the market rebounds. A financial advisor can be a great resource and help you set up an investment plan tailored to your unique situation.
Riley Love, MBA, CCS, BSc. Pharm
Partner/Financial Advisor – Love & Persson Group
