Following a dismal year in 2022, equity markets started the New Year on a positive note posting healthy returns for the month of January. Expectations that inflation is past its peak, has given the market confidence that central banks will begin to moderate the pace of interest rate rises. While the market is expecting a slowdown in economic activity in 2023 because of tighter policy last year, there is growing confidence that a severe recession will be averted.
The US market set the tone for global exchanges advancing by 6.3% for January with the technology heavy NASDAQ recovered some of its 32% loss from last year, improving by 10.7%. The Australian market gained 6.2% on the back of firmer commodity prices which have been boosted by the post-COVID reopening of the Chinese economy led by iron ore which is up 50% over the past 3 months.