Quarterly International Equity Strategy Q1 2023

Economies worldwide have proved resilient in the face of stubbornly high inflation and monetary tightening, and equities were rewarded with strong returns in the first quarter of 2023. Heightened concern over banks’ stability held back the financial sector, but elsewhere the rebound begun in the fourth quarter of 2022 remained in full swing. Europe’s momentum continued, backed by exports to a re-opening China and ever-cheaper energy; the Eurozone is increasing in the strategy’s model rankings and positioning. Despite Information Technology’s preponderance in the US and market leadership for the quarter, overseas markets kept pace, supported by modest strength in currencies such as the euro and pound, and company fundamentals within sectors. We believe that this latter source of strength—resiliency of earnings and convergence of multiples towards levels seen in US peers—will prove a long-term tailwind for international equities’ performance.