After the party, the hangover
The first week of January feeling was eerily reminiscent of one year ago: strikes, endless rain and then everything else that causes the usual January blues. Yet investors in diversified global investment portfolios will get a positive surprise when they look at their end-of-year valuations. All bar the most bond-heavy investment strategies will have not only provided them with positive returns, but even outstripped what was available from cash deposits or what inflation took away in purchasing power. On top of this tidy 2023 Christmas present, this year’s outlook is much less about dreading recession than the real possibility of an economic upswing.
December 2023 asset returns review
The proverbial ‘Santa rally’ was on many investors’ wish lists, and Christmas 2023 certainly delivered. Not only were returns strong virtually across the board in December, but upward moves seemed to increase further as the month progressed – including a burst of cheer into the close for Christmas. It was a continuation of the good feeling that swept capital markets in November, with investors hopeful about financial conditions and the global economy for 2024. Inflation is substantially and unmistakably lower than feared last year, and central bankers have recognised this. Policymakers continued to hint at looser policy stances in 2024, leading to a 3.7% monthly gain for global stocks in sterling terms. The table below shows December’s results across major regions and asset classes.
US election: will Trump shake markets?
There is an established truth in international politics that when America votes, the world watches. The historical reason is simple: as the world’s preeminent superpower, no country’s internal politics has as global an impact as the US. Ever since Donald Trump announced his first presidential campaign in 2015, though, melodrama has given global audiences another reason to tune in. And with criminal charges piling up against the former president – but not even scratching his campaign for his party’s candidacy – the 2024 election is sure to be Trump’s most dramatic yet.
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