Our monthly market update.
Equity markets in January were mixed, in the main, developed markets posted gains, whereas emerging markets declined, albeit there were regional variances. Markets in general were volatile, especially as the signals from the central banks were that the anticipated interest rate cuts may not be forthcoming as early as previously expected.
Government bond yields rose, which meant prices fell. Furthermore, oil prices rose amid the ongoing conflict in the Middle East and continued disruption to shipping.
Q4 2023 saw strong performance for global equities and bonds. Markets reacted positively as the US Federal Reserve (Fed), signalled interest rate cuts may be on the way for 2024, which was further fuelled by falling rates of global inflation, despite the backdrop of slowing global growth. There were regional disparities in equities, as developed markets outperformed emerging markets and ongoing concerns over China’s real estate sector and limited government policy intervention, impacted investor sentiment. Global bond yields fell over the quarter, which reflected a subsequent rise in price.
November was a positive month for equities as slowing inflation in the US and other regions gave rise to hopes that interest rates may have reached their peak. Chinese equities bucked this trend, as limited Government stimulus did not appease investor concerns about lacklustre economic growth.
Global bond markets benefitted from falling yields, which meant prices rose. This reversed the trend of recent months, where yields had continued to creep up and prices fall.
Global shares and bonds fell in October amid worries that US interest rates may remain higher for longer, given still strong inflation and robust economic data. The geopolitical situation was another concern for investors amid the conflict in the Middle East, the continuing war in Ukraine, and tensions between the US & China. The price of gold rose, as investors sought safe haven assets.
After strong gains in the first half of the year, global equities posted negative returns in Q3 2023. With the exception of the UK, global government bond prices declined as yields rose. Commodities rallied as oil production cuts were announced by Saudi Arabia and Russia.
The deteriorating economic data from China and renewed concerns over the weakness of its real estate sector weighed on global equities, which subsequently fell over the month. Emerging markets notably under performed developed markets due to negative investor sentiment towards China. Government bond yields continued to rise meaning their prices fell. However, the yield rises were less than in previous months, and in actual fact, global bonds (government and corporate) overall, produced a positive return.
July was a positive month for global equities. In contrast to the year to date, emerging markets outperformed developed market equities, as Chinese authorities pledged measures to boost and support the economy. Domestic based (smaller) companies also tended to perform well in their respective indices. Equity gains were further supported by the surprisingly lower inflation readings in several developed markets, including the US and the UK.