Saxo’s Quarterly Update: A deep-dive into asset class performances Saxo’s Quarterly Update: A deep-dive into asset class performances Saxo’s Quarterly Update: A deep-dive into asset class performances

Saxo’s Quarterly Update: A deep-dive into asset class performances

Macro 5 minutes to read
Charu Chanana

Head of FX Strategy

Summary:  Q1 was a roller-coaster with sustained inflation pressures but fresh concerns arising from banking turmoil. Crypto led the gains across asset classes as alternative stores of value were sought, with Gold also being in favor. Semiconductor and tech sectors and equities outperformed, and investors also flocked into safer bonds. Commodities, except industrial metals, lagged in Q1 amid ramping global demand concerns.


Q1 was a relief for markets after a tough 2022. Nonetheless, it was a bumpy ride, having started on a positive note with growth reacceleration calls picking up in January before inflation concerns picked up again in February. March was however marked with concerns of a banking crisis and financial contagion bringing the financial conditions to be the tightest in the cycle, but the quarter has ended on a calm note suggesting no risks of a systemic crisis as authorities stand ready to support with needed measures. Still, concerns of a recession have been brought forward with bank tightening lending standards as deposits dwindle.

Equities: NASDAQ leads, India lags

Broad gains were seen in equities in Q1 as central bank tightening bets were pared due to concerns of a financial contagion. However, equities have refused to price in a higher equity risk premium for now despite heightened concerns over economic growth. NASDAQ 100 led the gains, up 20.5%, as a tumble in Treasury yields, as well less funding requirements for cash-rich big tech stocks made them a safe-haven in the environment of banking concerns. MSCI Taiwan and Korea pushed higher due to the outperformance in semiconductor stocks, while India was a laggard due to Adani crisis and rich valuations. European stocks also had a strong quarter, with France’s CAC up 13% and German DAX up 12%.

Digging into the US sectors, semiconductor and technology outperformed while energy and oil & gas underperformed due to the drop in crude oil prices. Financials sector was also a key laggard due to the slide in bank stocks.

Fixed Income: Flooding into the safer government bond ETFs

We used ETFs to compare fixed income performance for the quarter. Gains were led by TLT, the US Treasury 20+ years Treasury Bond ETF, as investors rushed to safe havens amid sustained inflation concerns coupled with growth slowdown and banking sector fears. Meanwhile, high yield bonds remain out of favour as concerns of a credit crunch grow.

FX: Sterling and euro outperform, NOK and AUD underperform

The US dollar was choppy in Q1 amid fast-changing interest rate outlook. While sustained interest rate hike bets from BOE and ECB supported their currencies, retreating rate hike bets weighed on AUD. NOK, being the least liquid currency in the G10 space, was the most exposed to tightening global financial conditions, market volatility, and banking turmoil, ending the quarter the weakest.

Commodities: Tough quarter as demand concerns weighed

Weakness in the commodities space was mostly driven by energy as global demand concerns were a key focus first because of Fed’s rapid tightening cycle and later because of the tightening credit conditions. Grains started the year on a downbeat note but picked up some gains in March. Metals were the outperformer with iron ore up 10%, gold up 8% and copper up 7%.

Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-hk/about-us/awards.

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.