January data revealed resiliency throughout major economies despite considerable economic uncertainty and tighter financial conditions. The U.S., Europe and China reported economic expansion in the fourth quarter of 2022, albeit at relatively slower levels. Inflation has been coming down but remains at stubbornly high levels, particularly in Europe and the U.K. The Bank of Canada (“BoC”) raised its benchmark overnight interest rate by 25 basis points (“bps”) to 4.50% in January while signalling its intention to pause interest rate hikes. Central banks in the U.S., Europe and the U.K. will make their first 2023 interest rate announcements in February.
Global equity markets advanced over January 2023 as economic results lifted expectations that the global economy might avoid a deep recession. In Canada, the S&P/TSX Composite Index posted a gain, led by the Information Technology sector. In the U.S., the S&P 500 Index finished higher, benefiting from the strong performance of the Consumer Discretionary sector. Yields on 10-year government bonds in Canada and the U.S. ticked lower over the month. Oil prices finished lower, while the price of gold advanced amid economic uncertainty.