December 2023

• Global markets ended strongly as investors increasingly anticipated interest rate cuts during 2024 following continued moderation in inflation.
• Equity markets globally reached multi-month or record highs, led by technology and growth sectors.
• Central banks signalled that tightening cycles were likely complete, improving investor confidence.
• Bond yields declined sharply during the final months of the year, supporting broader risk assets.
• Emerging markets benefited from weaker dollar conditions and improving global liquidity expectations.
• Commodity prices delivered mixed performance amid balancing growth optimism and softer demand conditions.

Asia (ex. Japan)

Asian markets outside Japan advanced during December as improving global financial conditions and declining U.S. bond yields supported investor sentiment across the region.

Technology-focused economies such as Taiwan and South Korea continued benefiting from strong semiconductor and artificial intelligence-related demand, while Chinese markets remained weighed down by ongoing property sector weakness.

Europe

European equities delivered strong gains during December as easing inflation and expectations for future European Central Bank interest rate cuts improved investor confidence.

Economic growth remained relatively weak across several economies, though lower energy prices and improving financial conditions reduced recession fears significantly compared with earlier in the year.

United States

U.S. equities reached fresh highs during December as the Federal Reserve signalled that interest rate cuts could begin during 2024 if inflation continued moderating.

Technology and growth stocks remained major market leaders throughout the rally, while investors became increasingly optimistic regarding the possibility of a soft economic landing.

United Kingdom

UK equities advanced during December as inflation continued easing and bond yields declined, improving investor sentiment toward domestic financial markets.

Markets increasingly anticipated that the Bank of England would eventually begin easing monetary policy during 2024 as economic growth slowed and inflation pressures moderated.

Japan

Japanese equities remained strong during December as accommodative monetary policy, improving corporate governance reforms and strong foreign investor demand continued supporting markets.

Investors continued monitoring potential future Bank of Japan policy changes, though monetary conditions remained highly supportive overall.

Emerging Markets

Emerging markets performed positively during December as declining U.S. yields and weaker dollar conditions encouraged investor inflows into higher-risk assets.

Technology-related Asian economies benefited strongly from semiconductor demand and improving global risk appetite, while commodity-exporting markets experienced more mixed conditions.

Commodities

Commodity prices delivered mixed results during December. Oil prices remained relatively subdued as concerns regarding slowing global demand offset geopolitical risks and supply management efforts.

Industrial metals stabilised amid improving financial conditions and expectations for stronger manufacturing activity during 2024, while gold prices strengthened significantly due to declining bond yields and expectations for future interest rate cuts.