To many investors the opening quarter of 2013 has appeared to be very similar to the opening quarters of 2012 and 2011. Once again equity markets have started the year strongly and investor confidence appears to have returned. However, many investors are now subsequently concerned that the patterns of 2011 and 2012, where markets started strongly, but faded and retraced over the subsequent months, is once again going to play out during 2013. There is evidence to support that view, as the world remains in a period of slow economic growth and threats to that remain, but there is also evidence that 2013 will not follow the pattern of the preceding two years. Reasons for this include, that unlike 2012 there is no uncertainty regarding elections in the USA or China, plus economic fundamentals have continued to slowly improve, although significant country and regional differences clearly do exist, and simply that another year of recovery from the crisis has passed. Only at the end of 2013 will anyone be able to say with certainty that 2013 was different, or not.

During the first quarter, equity markets, as measured by the MSCI Europe Index delivered a return of 2.70% . The quarter saw positive returns produced in all three months of the period at the global level, but within Europe things were somewhat different. Like the wider market Europe in January saw markets rise over 5%, and that drove the quarterly return. However, the European market sold off somewhat in February, and then in March the market produced a small negative absolute return. The Italian election outcome in February and Cypriot crisis in March were the major events in Europe over the period, and these were negative influences on market sentiment during the quarter. The economic picture in Europe remains very challenging, but very slowly Europe is working its way through the debt overhang and austerity measures.