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Countryside Road

Ark Review of the Month

May 2023

Global Markets


Global equity markets diverged significantly in May 2023, with the Japanese TOPIX up 3.6% and the US S&P 500 up 0.4%. On the other hand, the MSCI Europe ex-UK index fell by 2.1% and the UK FTSE All-Share Index fell by 4.6%.


In fixed-income markets, global investment grade corporate bond prices fell by 1.9%, the UK Gilt prices fell by 3.8%, and the US Treasury prices fell by 1.2%. Commodity markets also experienced significant declines in May. Oil price was down 40% from a year ago. Prices of industrial metals also fell significantly, mainly due to the drop in global demand for commodities and a decline in manufacturing output in China.

As of 31 May 2023:

UK 10 Year Gilt Yield 4.18%
US 10 Year Treasury Yield 3.65%
Germany 10 Year Bund Yield 2.28%

UK Market

At the Bank of England's Monetary Policy Committee meeting on 10 May 2023, Committee members voted by a 7-2 majority to raise the Base Rate by 0.25 percentage points to 4.5%. The Base Rate is expected to peak at around 4.75% in the fourth quarter of 2023. CPI inflation in the UK finally fell to 8.7% in April 2023 after seven consecutive months above 10%. A lower annual inflation rate does not mean lower prices, but rather a lower rate of price increase. Data from the Office for National Statistics (ONS) shows that except for the significant price drop in the energy sector, inflation in other areas of the economy remains high. In the year to April 2023, food prices rose by 19.0%, slightly below the 19.1% rise in March, which was a 45-year high. Between April 2021 and April 2023, food prices have risen by 27%.


UK GDP for H1 2023 is estimated to be flat, with an improved outlook reflecting stronger global growth, lower energy prices and fiscal support in the spring budget.

Ark Insights

Recently, global investment banks are turning bullish on the pound. The pound currently trades close to its one-year high against the dollar and close to its five-month high against the euro. Analysts believe that this year, with a stronger GDP, manufacturing output and employment data in the UK, and external factors including falling gas prices and a weakening dollar, conditions are in place for a recovery in sterling.


In a recent research paper, Goldman Sachs said that they believe the main factors that acted as impediments to the pound's performance in 2022 - natural gas prices and the Bank of England's policy stance - have turned to tailwinds. Citigroup, which has been bearish on the pound for the past few months, also mentioned in its report that, the UK's economic activity has proven to be more resilient than their expectations. NatWest expects the pound to rise to $1.30 by the end of the year. Compared to other developed countries, the UK economy is more reliant on services than manufacturing, which is also beneficial to the pound.

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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