2023 saw global equity markets outperform expectations, ending the year with positive returns across diverse sectors. Despite challenges, the global economy showed surprising strength especially in the second half of 2023. Both consumers and governments kept spending despite rising interest rates, while businesses benefited from improved supply chains and lower energy costs.
Overall, the outperformance of the stock market in 2023 can be attributed to a confluence of factors: a weaker US dollar (its first decline since 2020), softening central bank policies fueled by favorable inflation news, and resurgence in investor confidence thanks to a resilient US consumer and positive economic data in Europe. Notably, December saw broader market participation with tech stocks outperforming, while a dovish pivot by the Federal Reserve following November’s lower-than-expected inflation reading further boosted buying sentiment. This positive trend extended to Europe, with both the Eurozone and the UK experiencing lower inflation than predicted, solidifying the overall optimistic outlook for global equities at the end of 2023.
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