What a first half of the year! We all came off a difficult 2022 and we weren’t sure how 2023 would play out. But boy does change happen. And it can happen quickly.
The first quarter of 2023 was kind of like the revenge of 2022. Assets that had a tough year in 2022 were back with a vengeance. Tech and overseas markets led equities. Crypto boomed and bonds posted solid gains in the first quarter. On the opposite side, commodities, which had risen consistently over the past two years, saw their prices trend downwards in the first quarter.
After losing almost 20% in 2022, the S&P 500 gained more than 7% in the first quarter. While the US economy slowed to 1.1% annual pace, consumer spending has remained resilient at an almost 4% annual rate. Interest rates were at 4.75–5% as of April and are expected to continue rising.
The two major US bank failures in March brought a scare to the financial sector. However, swift government action in guaranteeing the deposits helped to contain the damage. On the other side of the ocean, the Chinese economy, which has reopened after lockdowns, grew by 4.5%, beating expectations by 0.5%.
6 assets to watch in the second quarter
The first quarter brought many surprises to the market. We don’t know what the future holds, but here are six assets that we are looking at in the second quarter.
Gold
Gold reached a multi-year high at around $2,050 in mid-April as investors ran to the asset “safe-haven” amid the recent banking crisis. Some additional factors contributing to the rise in value of gold include inflation, speculation concerning the Federal Reserve’s future policy and OPEC+’s recent announcement that it would reduce oil output. Gold broke $2,000 in July 2020 during the height of the COVID-19 lockdowns and in February 2022 when Russia invaded Ukraine.
Louis Vuitton Moet Hennessy
The luxury cosmetics, jewellery and fashion company reached an all-time high as the Chinese economy has begun to reopen and more consumers are spending money on luxury goods. The stock was trading just under $700 at the beginning of 2023 and briefly surpassed $900 in late April.
BIL
The SPDR Bloomberg 1-3 Month T-Bill ETF, or in short, the BIL, is experiencing a resurgence in the fixed-income market as more people are attracted to fixed income as a way to reduce risk and lock in high-potential dividend yield. The BIL tracks the 1-3 Month US Treasury Index and has 19 securities in the fund.
META
META has approached new highs after a challenging year by taking efficiency actions and returning to growth in Q1. The company beat expectations for sales in the first quarter which led to an immediate 12% boost in share price and a better-than-expected guidance for the second quarter.
VIX
The CBOE Volatility Index (VIX) has decreased to a multi-year low as investors believe that the rate hike will come to an end due to inflation cooling down.
Sugar
The price of sugar is up more than 30% in 2023 as of early May. Unexpected rainfall in India, farmers in the EU planting fewer beets, demand continuing to rise since the COVID-19 lockdown period and a slash in oil production causing a diversion of resources from sugar to ethanol, have all pushed up sugar prices.
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