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Ark Review of the Month

June 2023

Global Markets


In the second quarter of 2023, the impact of higher interest rates is starting to show. Global manufacturing activity is on a downward trend, particularly in Europe and Asia. The services sector, on the other hand, continues to rebound as household spending has gradually returned to pre-pandemic levels. Global GDP growth is projected to slow to 2.4% this year and to 1.9% in 2024.


Developed markets equities are outperforming in 2023. Japan's TOPIX rose by 22.7% in H1 2023, the US S&P 500 Index rose by 16.9% and the MSCI Europe ex-UK Index increased by 13.8%. The UK FTSE All-Share Index underperformed compared to other developed economies, rising by 2.2% in the first half and falling 0.5% in the second quarter.


Bond markets on the other hand have yet to show a significant recovery, with global sovereign bonds up just 1% year to date, UK government bonds down 6.0% in the second quarter and down 3.9% year to date. Commodities, the top performer last year, fell by 2.6% in the second quarter and down 7.8% this year. The sharp turnaround in market sentiment demonstrates the importance of diversification in portfolios.

As of 30 June 2023:

UK 10 Year Gilt Yield 4.39%
US 10 Year Treasury Yield 3.84%
Germany 10 Year Bund Yield 2.39%

UK Market

UK's economic outlook remains challenging. Although the UK is expected to avoid entering a recession, economic activity will be stagnant for most of 2023. Inflation has eased but will remain high. UK consumers remain under pressure and sentiment is likely to stay low. The Bank of England's Monetary Policy Committee voted by a 7-2 majority to raise the Base Rate by 0.5 percentage points to 5% at its meeting on 21 June 2023. Two members voted to keep the Bank Rate at 4.5%. The Base Rate is expected to fall to 3.25% by the end of 2024. Though UK companies still face an uncertain backdrop, valuations are generally cheap at the moment and there are still some investment opportunities. 

Ark Insights

Core members of Ark’s research team were invited to Bloomberg Sustainable Business Summit on 28 June, where global banks, consumer goods companies, green energy technology firms and supranational energy organisations gathered in Bloomberg's headquarter in London to discuss how to drive business value and meet ambitious ESG goals. We were reminded that the climate emergency is still the biggest challenge. Drought, wildfire, flood and geopolitical tensions have put up prices on the food we consume. As the CEO of the Global Wind Energy Council alluded to, we should be more realistic about the cost of the energy transition on countries, communities and companies.

At the time of writing, the news is dominated by Thames Water, we want to reassure you that we do not hold Thames Water in our corporate bond portfolio. We will continue to watch our other utility holdings closely.

As always, our Investor Relations team would be more than happy to help you with any queries.


The views expressed in this update are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument. The views reflect the views of Ark Investment Management at the date of this document and, whilst the opinions stated are honestly held, they are not guaranteed and should not be relied upon and may be subject to change without notice. Investments entail risks. Past performance is not necessarily a guide to future performance. There is no guarantee that you will recover the amount of your original investment. The information contained in this update does not constitute investment advice and should not be used as the basis of any investment decision. Any references to specific securities or indices are included for the purposes of illustration only and should not be construed as a recommendation to either buy or sell these securities or invest in a particular sector. If you are in any doubt, please speak to us or your financial adviser as appropriate.

Issued by Ark Investment Management Ltd which is authorised and regulated by the Financial Conduct Authority. 

© Ark Investment Management Ltd. Registered in England & Wales with the company number 09281759.

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