Market update – October 2023

Insights — November 2023

We share our latest observations on global asset markets regarding T8 Energy Vision

World equity markets experienced a third consecutive month of selling after the strong positive returns of June and July. The strong risk-off sentiment continued into October across all geographies, with world equities falling by 2.9% (in US dollars), following on from the worst monthly return of 2023 posted in September (-4.3%). Goldman Sachs reported that the combined net selling from August to October in global equities was the second largest over any three-month period in the past 10 years (only the second quarter of 2022 was larger) and ranks in the 99th percentile.

The United States, with its better macroeconomic backdrop and the resilient performance of its mega-cap technology stocks, retreated by 2.1%, outperforming equity markets in Europe (-3.6%) and the Asia Pacific region (-3.9%).

In currency markets, investors looked for the safety of the US dollar which strengthened by another 0.5% (trade-weighted basis), after rising by 2.5% in September.

One of the main catalysts for three consecutive months of equity market drawdowns was investor uncertainty on the future path for interest rates after an aggressive 18-month tightening cycle. Resilient economic data out of the United States and persistent inflation was seen as reducing the likelihood of monetary easing (rates cuts) for the foreseeable future and increasing the possibility of further interest rate hikes.

Further, there was investor concern on how long tight monetary policy would remain in place and the medium-to-long-term impacts on the economy.

In response, investors continued reducing their allocation to long-dated US Treasury bonds in October causing a bond market sell off which saw 10-year and +20-year yields spiking by 36 bps and 37 bps, respectively (a greater than 1.5 standard deviation move for a second consecutive month), with the latter breaching and holding above a yield of 5%. In the last 3 months, 10-year US Treasury yields have risen by nearly 100 bps.

The correlation between equities and bonds remained elevated, as both asset classes posted negative returns for the month.

Clean energy

The Clean Energy Index followed the equity market lower, falling by 16.3%, as small cap companies (-6.9%) fell more than large caps (-1.6%). Growth stocks recovered last month’s underperformance relative to value companies, outperforming by 2.2% in difficult market conditions.

The utilities sector, which features in the clean energy universe and is typically associated with low volatility, was the only sector to post a positive return in October (+1.2%) after falling heavily in September due to its sensitivity to rising bond yields. It continues to be the worst performing sector on a year-to-date basis (-15.5%) but one of the most attractively valued after the steep sell off.

In the month of October, the conventional energy sector was the worst performer, falling by 6.1% as the price of oil declined by more than 8% due to concerns around global economic growth (and despite rising geopolitical risks which typically have a positive impact on the oil price).

Solar stocks finished a fourth consecutive month in negative territory (-18.9%).


There is no doubt that the last two years have been brutal for clean energy stocks. However, the energy transition will remain a priority for governments, corporates and consumers. We strongly believe that the present headwinds represent temporary factors which relate to the present macroeconomic environment.

While appetite for equities and broader risk appetite is low, this will not persist indefinitely. Our philosophy is that it is impossible to accurately forecast the timing of when markets will rebound but that it is inevitable and often occurs without a decisive signal (or one that can only be clearly seen in hindsight). This is why we remain invested notwithstanding low market risk appetite.

We remain confident in our portfolio of the highest quality, most fundamentally attractive clean energy stocks (companies with industry leadership positions, strong fundamentals, strong balance sheets and sustainable competitive advantage) and don’t anticipate making significant changes. There is no change to our view that each exposure represents a compelling value proposition.