SPW MarketWatch: September 2023

  • Shunil Roy-Chaudhuri, Personal Finance and Investment Writer
  • 06 October 2023
  • 5 mins reading time

Source: FactSet, 3 October 2023. Figures are monthly price returns in local currencies for September 2023.

M&S re-enters the FTSE 100

On 18 September, retailer Marks & Spencer rejoined the FTSE 100 index after a gap of four years. M&S’s ‘promotion’ into this prestigious index, which comprises the 100 largest companies listed on the London Stock Exchange, reflects improvements made at the retailer, which drove up its share price. In particular, M&S honed its clothing and home ranges and offered greater choice in the food business.

M&S’s good fortune contrasts sharply with that of homewares and DIY retailer Wilko, which became insolvent in August. There was optimism that a buyer would enter with a rescue package, but this hope faded in September. Speculation that music retailer HMV would acquire at least 100 sites also proved wide of the mark. Even so, the owner of Poundland took on the leases of up to 71 Wilko stores (1).

The success of M&S reminds us of what good management can achieve. But at Schroders Personal Wealth (SPW) one of our principles is diversification, meaning not putting all your eggs in one basket. This can help spread risk and avoid over-exposure to individual company shares, industry sectors (such as retail) or types of investment assets.

We currently have a neutral stance on UK equities (shares), despite their relatively attractive pricing. This is because we have concerns about the combined impact on UK equities of a possible combination of a stagnant economy with high inflation. We also have a neutral stance on equities in general, due largely to our expectations that the US economy will begin to slow in the medium term.

Australian dispute and European gas prices

European gas prices rose sharply on 8 September after workers at liquefied natural gas (LNG) facilities in Australia began striking (2). This was a seemingly curious outcome, as Australian LNG is rarely sold in Europe.

So what happened? Quite simply, if Asian buyers of Australian LNG need to find other sources, then they will start to compete with Europe, driving up LNG prices in the process. And Europe has come to increasingly rely on LNG after Russia cut gas exports to the area following the full-scale invasion of Ukraine.

In September, European gas prices rose by 14 percent to €40.69 (£35.25) per megawatt hour (3), reflecting rises in energy prices in general. We have a positive stance on energy, despite the cuts in oil production from the OPEC+ group of oil-producing nations, as demand for oil remains firm. Indeed we retain our positive outlook on commodities as a whole as we expect oil prices to rise further.

Rush of bond issuance

On Tuesday 5 September around $34 billion (£28 billion) worth of high-quality (investment grade) corporate bonds were issued in the US. This was one of the 10 strongest days in the history of the corporate bond market, according to US investment bank JP Morgan. London Stock Exchange Group said it was the busiest day in more than three years (4).

Expectations of a possible US interest rate rise helped drive the bond flurry. This is because the interest payments companies have to pay on their bonds often go up when interest rates rise, making it more expensive for them to service their debt.

In the event, US central bank the Federal Reserve (Fed) held rates steady at 5.25 percent to 5.5 percent on Wednesday 20 September. But Fed chair Jay Powell said: ‘A majority of participants believe that it is more likely than not that … it will be appropriate for us to raise rates one more time in the two remaining meetings this year’ (5).

We currently have a positive view on corporate bonds. In particular, we think European bonds continue to offer good value overall.


(1), ‘Poundland owner to take on up to 71 Wilko stores’, 12 September 2023.

(2) Financial Times, ‘European gas prices soar as Australian workers begin strike’, 8 September 2023.

(3) FactSet, Schroders Personal Wealth, European Gas Spot Index (ESGI) TTF (EEX EUR/MWh), 2 October 2023.

(4) Financial Times, ‘US and European companies rush to issue debt before rate decisions’, 7 September 2023.

(5) Federal Reserve, ‘Transcript of Chair Powell’s press conference September 20, 2023’, 20 September 2023.

Important information

Forecasts of future performance are not a reliable guide to actual results neither is past performance a guide to future returns.

The value of investments and the income from them can fall as well as rise and are not guaranteed. The investor might not get back their initial investment.

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