February 2023

After a somewhat euphoric start to the year which saw the European and American markets rise by more than 6% in January, the financial markets showed more restraint in February with a slightly positive difference for Europe: the Stoxx 600 index rose by another 1.9% in February while the S&P 500 lost -2.6%.

While we are certainly seeing an improvement in macroeconomic conditions as witnessed by the rebound in services in the US or the emergence of China from its successive lockdowns that had brought its economy to a standstill, which should represent a big support to the global economy; on the other hand, the spectre of inflation in the West has not disappeared and our central bankers are steering the evolution of key rates with their foot on the brake; the FED has raised its intervention rate by 25 cents and Mrs Lagarde has declared that rate hikes intended to curb inflation could continue.

As a result, the bond market bore the brunt of these tightenings, with 10-year yields in the US back above 4%. However, real interest rates remain in negative territory, which shows that policymakers are trying to find the right «fine tuning». The persistent inversion of the yield curve suggests, however, that the exercise is delicate and that a return to normal is not yet in sight. In this contrasting macroeconomic environment, the equity markets are once again offering us more clarity as companies publish their final 2022 results, which are encouraging on the whole. For example, car manufacturer Stellantis reported an 18% increase in revenue and 26% increase in profit for 2022, and Italian bank Unicredit reported a 13% increase in revenue and a 34% increase in net income.

What emerges from this sequence is the idea that investors no longer anticipate a beneficial surprise in the months to come from a quick victory over inflation, but that the appetite for equity risk comes when corporate results are on track. Long live stock picking once again! The sub-funds of the Clartan SICAV all rose in February, with respective increases of 3.4% for Clartan Valeurs, 2.8% for Clartan Ethos and 4.2% for Clartan Europe. Apart from the still dangerous geopolitical context, the outlook seems favourable to us for the companies on which our portfolios are built.