Global Market Commentary - March 2023

Wahed Editor
April 12, 2023
Global Market Commentary - March 2023

Global markets continued their upward albeit volatile trend in March, with fresh concerns about the stability of the banking systems in the US and Europe dominating the headlines. Despite this, the MSCI World Islamic Index rose by 4.7% in February, while the Dow Jones Sukuk Index rose by 1.3%.

Much of the strong performance in March caught investors off guard, as many remained on the sidelines waiting for an ideal entry point and were bracing for financial turmoil resulting from the collapse of Silicon Valley Bank in the US and the takeover of Credit Suisse in Europe. 

The banking sector of the stock market was shaken by the failures of Silicon Valley Bank and Credit Suisse. Wahed’s equities allocations outperformed the market in March as Wahed only invests in halal assets.

While bank stocks continued to exhibit weakness over the course of the month, the rest of the markets recovered and turned positive, as market participants began to realize that the weaker regions of the banking industry were not contagious to other market sectors. Expectations of the hiking cycle coming to an end also improved sentiment. 

The market pullbacks have had progressively higher support levels, which has produced a snowball effect for the incremental gains as investors start to fear missing out on the rally, and this has allowed equities to build momentum.

The S&P 500 gained 3.5% for the month, while the MSCI All Country World Index rose 3.1%. By contrast, HLAL, Wahed’s US equity ETF finished the month up 6.2%, while UMMA, Wahed’s international (non-US) equity ETF, rose 6.9%. 

The US dollar also weakened during the month, as it tends to do after rising during sell-offs on the equity market. Due to their exposure to the US dollar, portfolios denominated in other currencies, such as GBP, benefit from their US dollar assets during down markets and give up a little during bull markets. These portfolios have retained positive absolute returns with decreased volatility.

As we approach April, the market has a high degree of liquidity as a result of investors keeping surplus capital on the sidelines, ready to deploy into risk assets at any moment. As a result, the market rally should continue as investors who were caught off guard by the pain trade in March may seek exposure while asset prices are still increasing.

We anticipate that the markets will be resilient in the face of macroeconomic data that may point to a US recession. Markets predict economic data in advance, and if a recession occurs, they may already be speculating about the subsequent recovery.

Continuing interest rate increases by central banks in the face of stronger-than-expected economic data, such as payroll, employment, and inflation data, is one potential risk factor. While central banks have indicated that they are nearing the end of the hiking cycle, there is still considerable uncertainty and debate among market participants about the terminal rate and timing of any potential future interest rate decreases. Although the long term outlook remains positive, given the lack of consensus among market participants regarding macroeconomic forecasts and sentiment, there could be some volatility in the near term.


This material has been distributed for informational and educational purposes only and the opinions expressed represent the views of the author and not necessarily those of Wahed Invest LLC or any of its affiliates, directors or personnel (“Wahed”).  Any assessment of the market environment as of the date of publication is subject to change without notice, and is not intended as investment, legal, accounting, or tax advice. Wahed assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. Any strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security.

Furthermore, the information presented may not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance. There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services and should seek advice from an independent advisor before acting on any information presented.

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