Market Outlook Autumn 2023
- philmather5
- Nov 9, 2023
- 2 min read
The performance of global equity markets has been mixed. Investors expect interest rate hikes the end shortly but now are considering the effects of rates being held at an elevated level for an extended period.
UK equities have lagged other developed markets for much of this year due to higher inflation and a weaker economic outlook. However, strong returns in recent weeks have helped close some of the performance gap as rising interest rates once more helped banking stocks, and rising oil prices pushed up shares in the UK’s energy companies.
The best performance came from Japanese equities, as modest inflation and steady economic growth rewarded investors. US and European equities have struggled this quarter. Higher interest rates have contributed to a decline in the technology stocks that fuelled the US equity rally in the first half of the year. Meanwhile, European equities have struggled as economic growth has stalled. Concerns about poor economic growth in China have dragged on the performance of emerging market equities, although this was partially offset by strong returns from Indian equities. Sterling’s decline also detracted from returns from overseas equities.
Inflation has slowed and the Bank of England is expected to stop raising rates this autumn. However, the outlook remains certain due to inflationary pressure from rising wages and the increase in the oil price. Markets expect rates to remain higher for longer than previously forecast to ensure inflation is tamed and this caused government bonds to fall.
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