Economic market update

Performance for global financial markets was mixed – Global Developed Market equities returned 1.8% (the MSCI World Index) and Emerging Markets returned -1.6% (unhedged). The key dynamics which were impacting markets focussed on geopolitical tensions and the likelihood and timing of interest rate cuts in major economies.

USA flag

United States

The US equity market remained strong, with the S&P 500 returning 1.7%. This was supported by robust economic data and ongoing positive sentiment for AI-related stocks. There was real GDP growth of 3.3% in the fourth quarter of 2023. This eased inflationary pressures and a stable labour market all assisted a positive outlook. The Communication Services and Financials sectors led the gains but the Materials, Consumer Discretionary, and Real Estate sectors lagged.

European Union flag

Europe and the UK

European markets gained, with the MSCI Europe Index delivering 3.2%. This was driven mainly by IT and Communication Services. This gain was in spite of some indications pointing to challenges in the real economy, including a stagnant manufacturing sector. Nonetheless, consumer confidence has improved and overall economic growth has stabilised.

Chinese flag China

China and Emerging Markets

Emerging Markets encountered challenges and the MSCI Emerging Market Index declined by -1.6%. China was the main detractor, with the MSCI China Index returning -10.4%, in spite of intervention and stimulus by the Chinese government. The government’s efforts were not enough to counter perceptions of challenges linked to the property sector downturn and subdued investment activity.

Australian flag


The Australian equity market was positive, with the ASX 300 index returning 1.1%. The Energy (+5.2%) and Financials (+5.0%) sectors outperformed but Materials (-5.0%) and Utilities (-1.5%) experienced declines.

At the February Reserve Bank meeting, the RBA maintained interest rates at 4.35%, aiming to guide inflation towards the target range.

Money bag flag

Currency and Bonds

Bond market returns were modest over January, due to shifting expectations about the likelihood and timing of rate cuts over 2024. The US 10-year government bond yield increased by 7 basis points to 3.95%, and the Australian 10-year government bond yield rose by 5 basis points to 4.01%.

The Australian Dollar depreciated against most major currencies during the month, registering a 3.1% decline against the US Dollar and a 3.0% decrease against the Euro.

Read the Market Commentary for December 2023.

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