Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

Most Major Asset Classes Deliver Impressive Gains in 2023

Published 17/07/2023, 13:14
Updated 09/07/2023, 11:31

Across-the-board rallies in all the major asset classes last week strengthened year-to-date performances in markets around the world based on a set of ETFs. The downside outlier: a broad measure of commodities, which continues to post a moderate loss so far in 2023 as of Friday’s close (July 14).

US equities remain in the lead this year. Vanguard Total Stock Market Index Fund ETF Shares (NYSE:VTI) is up 18.1% in 2023, well ahead of the rest of the field.

VTI Weekly Chart

“Equity strategists are boosting earnings forecasts for the S&P 500 Index over the coming year faster than they are marking them down, pushing a key indicator tracking the momentum of analyst revisions well off its November nadir,” reports Bloomberg. “After hitting negative 70% late last year, this metric — which focuses on forward earnings-per-share over 12 months — is closer to positive territory at minus 28%, according to data compiled by Bloomberg Intelligence.”

Corporate earnings could be a headwind, notes Jurrien Timmer, director of global macro at Fidelity. He advises that US stock market valuation has become increasingly “disconnected” from interest rates.

“But in more recent months, stocks have moved away from anchoring to interest rates and have been instead focusing on hopes of a recovery in earnings. This means that for this bullish pivot to be justified, earnings are going to need to come through. Currently, the consensus estimate is that S&P 500 earnings will contract by 9% in the second quarter and then bottom in the third quarter of this year before recovering in 2024. If that is correct, then the rise in stocks and increase in P/Es that we have seen since last October could be justified and could continue.”

3rd party Ad. Not an offer or recommendation by See disclosure here or remove ads .

Stock Valuations

Commodities are still the downside outliers this year. WisdomTree Continuous Commodity Index Fund (NYSE:GCC) has shed 2.8% in 2023.

Some analysts advise that the worst has passed for raw materials overall. Analysts at Citibank, for example, last week predicted that commodities looked set to stabilize after this year’s decline. Catalysts supporting this outlook include weather risks, other seasonal factors, and year-to-date losses that may have gone too far.

ETF YTD Total Returns

From a technical perspective, commodities are already showing signs of stabilizing, based on GCC. The ETF has rallied off its recent low and is trading near a three-month high. But until the fund can move above its late-2022 highs – roughly 18.75 – the case will remain speculative/weak that commodities are breaking out of the flat/slightly negative channel that’s prevailed over much of the past year.

GCC Weekly Chart

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.