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February Market Commentary

By February 1, 2023No Comments


Savers and investors will not shed many tears for the end of 2022. A year that was beset by inflation and rising interest rates meant only three of the major stock markets we report on made gains in the year.

That was how we started the final Stock Market Bulletin of last year. So it is refreshing to report that January 2023 was an excellent month for the major world markets, with only one failing to make gains. Some of the performances in January were good – and some were very good, to give a really positive start to the year.

The first week of the month had brought some gloomy news, with Kristalina Georgieva, the head of the International Monetary Fund, warning that 2023 would be ‘tougher’ than the previous year, with China, the US and the EU all seeing their economies slowing.

But the same week also brought news that gas prices for February delivery had fallen by 4.3% and, as we will see below, January was a month when the news on inflation was good. In Europe, for example, the inflation figure came in significantly below the forecasts.

That said, there is still a long way to go for the global economy to fully recover. There may now be no better barometer of global demand than smartphone orders, and a report in the US revealed that smartphone shipments experienced their most significant quarterly drop on record – falling by 18.3% year-on-year – in the fourth quarter as consumer demand cooled significantly.

In politics, January saw Jacinda Ardern stand down as New Zealand Prime Minister, saying she ‘no longer had enough in the tank’ to lead the country. She was replaced by Chris Hipkins, leader of the Labour Party. Also standing down was Nadhim Zahawi, Conservative Party chairman and – very briefly – one of the UK’s four Chancellors last year. Sadly Mr Zahawi had no choice in the matter, with PM Rishi Sunak sacking him for what is perhaps best described as ‘confusion’ over his tax affairs.

But, personal frailties aside, January was a month when the Bulletin’s glass was considerably more than half-full. The IMF did try to dampen the mood at the end of the month, forecasting that the UK would be the only major economy (including sanctions-hit Russia) to contract this year but – as starts to the year go – January 2023 was a good one.

As always, let’s look at the details…


January was a month when good news was hard to find in the UK but – as we will see at the end of this section – both the FTSE 100 index of leading shares and the pound made gains during the month.

The Government duly announced that this year’s Budget will be on Wednesday 15th March, but Chancellor Jeremy Hunt was quick to dispel any possible talk of tax cuts, despite what City AM reported as an £11bn ‘energy windfall.’

Sadly, you do not have to look hard for a reason for the Chancellor’s caution. Government borrowing for December was the highest ever recorded for the month. The actual figure was £27.4bn, the highest since records began in 1993 and with the country’s interest bill increasing due to the current high levels of inflation.

Small wonder, therefore, that not only can we look forward to a ‘prudent’ Budget, but that business leaders are expecting the Government to halve its energy bills support when the current scheme ends in March.

As everyone reading the Bulletin knows, inflation and rising interest rates made 2022 a very difficult year. Prime Minister Rishi Sunak pledged to ‘halve inflation and get the economy moving again’ but will he be in time? One in four of the more than 5,600 businesses surveyed by the British Chamber of Commerce in November had registered a fall in sales.

Nowhere was this more evident than in the UK car industry, with the number of new cars made in the UK ‘collapsing’ to its lowest level since 1956, according to figures from the Society for Motor Manufacturers and Traders. Clearly the global shortage of semiconductor chips has not helped with this, but you suspect that chips alone are not the answer.

There was at least some good news for the industry – and the wider economy – with the Governor of the Bank of England suggesting that the bank will ‘soon’ be able to stop increasing interest rates. Market expectations are that they will peak at 4.5%.

Not all, though, was doom and gloom in the car industry, with Bentley posting record sales. The company sold 15,174 vehicles in 2022, up 4% on the previous year as the luxury car market looked set to ride out the cost of living crisis. There was good news for the wider economy as well, with the UK economy surprising everyone by growing 0.1% in November, helped, apparently, by a boost from the World Cup. If only Harry Kane had scored that penalty…

What of the nation’s high street in January? While there was a big jump in shops closing in 2022 – the figure was put at 47 a day – several companies, including M&S, Sainsbury’s and Tesco – reported Christmas sales that were ahead of expectations. Amazon reported that it would close three warehouses – in Hemel Hempstead, Doncaster and Gourock – in a move that could impact 1,200 jobs. Are we all going back to ‘traditional’ shopping? Surely not.

As we reported above, both the FTSE and the pound enjoyed a good start to the year. The FTSE was up 4% to end the month at 7,772, while the pound closed January trading at $1.2324 – up 2% against the dollar for the month


We are fast approaching the first anniversary of Russia’s invasion of Ukraine, which began on February 24th last year.

The month started with Russia continuing to shell Ukraine, but that quickly led to retaliation, with an attack on a temporary barracks causing the death of 63 Russian soldiers. Unsurprisingly, this led to significant domestic criticism of Vladimir Putin and the Kremlin, who were roundly attacked for housing soldiers next to an ammunition dump. As we report in the Emerging Markets section, Russia continues to conscript troops for the war, which will eventually – if it isn’t doing already – have an adverse effect on the domestic economy.

The rhetoric – and the threatened weaponry – continued to escalate for the next week, until President Zelenskyy received what he described as ‘a wonderful Christmas present.’

The ‘presents’ were Bradley Fighting Vehicles – what you and I would call a tank – which were part of a $2.85bn (£2.29bn) aid package from the US, the largest aid package pledged at any one time. By the end of the month, the US was also sending Abrams tanks to Ukraine, with Europe also committing to the effort. Germany agreed that it would send 14 Leopard 2 A6 tanks, with the training of the crews to take place ‘quickly.’

Joe Biden did, however, draw the line at providing Ukraine with F-16 fighter jets. Perhaps we should add ‘for now’ to that, given that in March last year, the US President categorically ruled out sending tanks to Ukraine.

Putin responded to the promised tanks by once again sacking his commander in Ukraine, and claimed – in comments to the state broadcaster – that ‘the dynamic [of the war] is positive.’

The month ended with EU justice ministers demanding that Putin and his inner circle be held accountable for the ‘horrific’ crimes in Ukraine. ‘Putin and his cronies must face justice’ said a headline in City AM.


The year got off to a good start in Europe, with news that inflation may be falling more quickly than had been expected. An estimate from stats agency Eurostat suggested that the Eurozone’s rate of inflation in December had been 9.2% – below market expectations of 9.5% and adding to suggestions that the strong inflation rises seen over the last 12 months ‘are in the early stages of unwinding.’

As we have consistently commented over the last few months, there has been a significant shift in Germany’s energy policy with a move back towards coal. This has, inevitably, led to tension between climate change activists and Government policies, with February seeing protesters take to the trees in a bid to save the village of Lützerath in Western Germany from the expansion of an open cast mine on its doorstep.

By the end of the month, Germany had finally agreed to send tanks to Ukraine, but there were more pressing concerns for (relatively) new Chancellor Olaf Scholz with a poll showing that public trust in all levels of the German government has plummeted. Only 30% of respondents were prepared to say that they trust Scholz – down from 50% a year ago.

Elsewhere in Europe, there were protests in France against reform of the pension age, and the Dutch Government announced plans to close the Groningen gas field – the largest in Europe – on safety grounds. Not for the first time, Italy and the EU were reported to be on a ‘collision course,’ with unrest in Italy about the impact the EU’s economic policies are having domestically.

There was absolutely no unrest on Europe’s major stock markets in January, with both Germany and France enjoying an excellent start to the year. Both markets rose 9% in January, the German DAX index closing at 15,128 and the French stock market at 7,082.


January was a month when many of the major employers in the US announced job cuts. Amazon said they would be cutting 18,000 jobs as they looked to ‘control costs.’ Google said that 12,000 jobs could go and Microsoft announced a cut of 10,000 jobs, as it reported its slowest sales growth for six years.

Despite this, figures for December showed that the US economy added 223,000 jobs in the month, ahead of Wall Street’s forecast of 202,000. In normal times, this would be a signal for the Federal Reserve to hike interest rates, but while there may still be more rate rises to come this year, there are suggestions that cooling wage growth may convince the Fed to go for smaller rises than last year.

There was mixed news for Twitter employees: good news if they had survived Elon Musk’s recent cull and still had a job. But significantly bad news if one anecdotal report was to be believed: not only was the company sued for failing to pay $136,250 (£109,750) for its office space in San Francisco, but some employees were apparently bringing their own toilet paper into work as the company found a novel way to ‘cut costs.’

Elon Musk was – as always – much in the news as Tesla delivered a record 1.3m vehicles in 2022 but then cut prices by as much as a fifth in a bid to boost demand, amid suggestions that it was looking to ‘crush competition’ in the electric vehicle market. The company also announced plans to open a new $3.5bn (£2.8bn) production plant in northern Nevada for ‘semis’ – or trucks as they’re called on this side of the pond.

Traditionally in January, we report that the US government is getting perilously close to its debt ceiling. This year has proved to be no exception, with the BBC reporting that the US Government has hit the ceiling – a paltry $31.4tn (£25.3tn) – and the Treasury is now taking measures to prevent a Government default. A few days later, it was reported that a group of 43 Democrats in Congress wanted to abolish the debt ceiling altogether, allowing the Government to borrow money unchecked.

Wall Street, however, took the job losses at big companies and the possible Government default in its stride and – like other major markets – made a strong start to the year. The Dow Jones index was up 3% to close the month at 34,086 while the more broadly-based S&P 500 index fared even better, gaining 6% to 4,077.

Far East

For almost the whole of last year, we reported on China’s ‘zero Covid’ policy. Harsh lockdowns were imposed whenever there appeared to be any prospect of a Covid outbreak – Shanghai, the country’s commercial hub, was locked down for two months – and the policy continued irrespective of damage to the economy.

Suddenly, though, that has all changed, with the ruling Communist Party pushing the country towards an all-Covid-positive state, with Xi Jinping seemingly willing to pay any price – and trust to herd immunity – as he looks to re-open the country.

The re-opening of the Chinese economy means, of course, that the country’s demand for energy will increase. As we report below, China – along with India – appears to be buying the oil that Russia is not selling to the EU, but January also saw the country agree to an oil deal with the Taliban, with a Chinese company getting the right to drill for oil in the north of Afghanistan.

We have reported previously on China’s increasing use of coal as a source of energy and it will accelerate its use of coal-fired plants this year, apparently adding 70 gigawatts of coal power to the 40gw installed in 2022. This comes on top of a significant increase in solar and wind power, and a flurry of deals which has seen China become the biggest buyer of liquified natural gas (LNG). According to one report, Chinese buyers accounted for 40% of recent long-term LNG contracts.

Clearly the prolonged lockdowns harmed the Chinese economy in 2022, but the official figures for the fourth quarter were universally good, with growth for the quarter reported at 2.9% – well ahead of the estimate of 1.6%. Economic growth for the full year had been estimated at 2.7%: in the event the figure came in at 3%.

There was, however, some worrying long-term news for the economy, as China’s population fell for the first time since 1961, dropping by 850,000 from the 2021 figure with a birth rate of -6.77 births per thousand people.

There were rather more immediate worries in Japan – where inflation hit a 41-year high of 4% – and in South Korea, where Samsung’s profits plunged as the ‘demand for gadgets’ dropped. The company said that its profits for the last three months of 2022 would fall by 69% to their lowest level for eight years.

Despite those worries, January was an excellent month for the region’s stock markets. Hong Kong in particular made up a good portion of the ground it lost last year, climbing 10% to close January at 21,842. The South Korea market also caught up some of last year’s fall, rising 8% to finish at 2,425. The markets in China and Japan were both up by 5%, ending the month at 3,256 and 27,327 respectively.

Emerging Markets

January was a relatively quiet month for news in the Emerging Markets section of the Bulletin. As has become customary over the last 12 months, many of the headlines were made by Russia’s energy exports, with analysts predicting that the European Union’s ban on Russian oil products – set to come into force on February 5th – could lead to a 1m bpd (barrels per day) drop in Russian crude oil output.

There are also suggestions that the oil refineries could be running short of labour, due to the widespread conscription for the war in Ukraine.

Russia, though, still has a ready market for its oil in China and India. Oil from the Arctic – which traditionally went to the EU – is now finding a home in China and India, although it is believed to be selling at a ‘deep discount’ following the EU embargo and the price cap imposed by the G7.

While it may have plenty of oil, India appears to be struggling for supplies of coal. As we have reported previously, several countries have turned to coal in a bid to become ‘energy secure.’ But it appears that India’s power generators have struggled to rebuild coal stocks so far this winter: demand is rising faster than the country’s rail network can deliver coal from the mines.

What of the three major stock markets we cover in this section of the Bulletin? As we have seen above, January was an excellent month for the majority of world stock markets. India, though, was the only market to buck the trend: perhaps beset by worries about power supplies, the stock market closed down 2% at 59,550.

No such worries for the markets in Russia and Brazil, albeit recording much smaller rises than some of the other markets we cover. Both markets rose by 3% in the month: the Brazilian stock market closed at 113,431 while the Moscow index finished the month at 2,226.

And finally…

Sadly January 2023 wasn’t a vintage month for the ‘And Finally…’ section of the Bulletin. But there was plenty of talk about cake…

Professor Susan Jebb, the UK’s chief food regulator, slammed the practice of bringing cake into the office, telling the Times it was ‘as bad as passive smoking.’ But before you could wonder just how birthdays were celebrated in Professor Jebb’s office – possibly with a handshake and a glass of tap water – the pro-cake lobby was hitting back.

‘Utter tosh,’ proclaimed City AM the next morning. ‘Management gurus, CEOs and Square Mile workers all slammed a nanny state call to ban cake from the office.’

‘What would you do if you won the lottery?’ It’s a popular question and the answer is frequently, ‘buy a Ferrari.’ Or a Lamborghini – or any other supercar. Fortunately another supercar manufacturer appeared in January, adding competition and hopefully reducing the waiting lists. Where has it been built? In Afghanistan, and if you want to order one from the 30 engineers that built it, then ask for a ‘Mada 9.’ That’s assuming you’re happy for your ‘supercar’ to be powered by the same engine as a Toyota Corolla hatchback…

Lastly for this month, we travel into outer space. If you don’t have enough to worry about as the New Year starts, there’s the disturbing news that the snappily-named Comet C/2022 E3 ZTE is due to ‘graze’ Earth. You’ll recognise it by its greenish coma (the atmosphere round the comet) and yellow-tinged tail.

Having originally brushed past Earth, 50,000 years ago, it’s now back for a return visit. Fortunately, though, it probably doesn’t spell the end of life on Earth. ‘Grazing Earth?’ Happily a ‘graze’ in astronomy is 27 million miles. So we’ll probably be back next month…