Despite a couple of wobbles, share prices around the world managed to hold on to their recent gains this week.
Global markets appear on course to enter 2024 in a positive frame of mind thanks to enduring optimism around the likelihood of interest rate cuts over the next 12 months.
Monday’s session was volatile following comments at the end of last week from a policymaker at the US Federal Reserve. These suggested that the pace of monetary loosening might not be as rapid as investors had hoped. At the same time, news of attacks on commercial shipping in the Red Sea pushed oil prices higher. By the end of trading on Thursday, however, markets were back in a positive mood after data showed a surprisingly large fall in UK inflation, while crude prices edged back after reports of policy disagreements among OPEC members.
United States
On Wall Street, the Dow Jones Industrial Average ended trading on Thursday 0.3% up for the week so far, with the S&P 500 gaining 0.6%. Both indexes managed to build on last week’s strong performance, with the Dow hitting another all-time high and the S&P 500 coming within a whisker of its record close on Tuesday as technology stocks surged and research showed a rise in confidence in the construction sector. Wednesday’s session saw a sharp retreat as investors took profits, before the upward trend returned on Thursday, aided by a lower-than-expected number of unemployment claims.
UK
In the UK, the FTSE 100 closed on Thursday 1.6% up for the week so far with stocks in London enjoying a period of outperformance – something that has been relatively rare in 2023. News that the Consumer Prices Index in Britain had fallen to 3.9% in November, considerably lower than analysts had expected, provided a significant boost and raised the prospect of interest rate cuts early in 2024. Markets now expect the Bank of England to trim the base rate at least once in the first quarter. On the downside, economic data continued to disappoint, with weakening sales in the retail sector adding to the gloomy outlook.
Europe
In Frankfurt, the DAX index ended Thursday’s session down 0.4% for the week, while France’s CAC 40 lost 0.3%. With a lack of economic data or European Central Bank news, investors in Europe had little to get excited about – and it now seems possible that interest rates could fall in the UK before they do in the eurozone. Research suggested German retailers, like their British counterparts, are finding trading conditions particularly tough, while there were sharp share price falls in real estate and automotive companies during the week.
Asia
In Asia, the Hang Seng index in Hong Kong dipped 1% after policymakers in Beijing decided against cutting interest rates on Tuesday. Investors had been hoping for further stimulus to help the Chinese economy recover from its ongoing slump. Japan’s Nikkei 225 index of leading shares, meanwhile, advanced 0.5% after the Bank of Japan indicated that the country’s low-interest rate regime could remain in place for longer than markets had expected. The news led to falls in the yen, providing a boost for the share prices of Tokyo’s numerous multinationals.
December 15 | December 21 | Change (%) | |
|---|---|---|---|
FTSE 100 | 7576.4 | 7694.7 | 1.6 |
FTSE 250 | 19209.0 | 19571.0 | 1.9 |
S&P 500 | 4719.2 | 4746.8 | 0.6 |
Dow Jones | 37305.2 | 37404.4 | 0.3 |
DAX | 16751.4 | 16687.4 | -0.4 |
CAC 40 | 7596.9 | 7571.4 | -0.3 |
ACWI | 716.5 | 720.5 | 0.6 |
Hong Kong Hang Seng | 16792.2 | 16621.1 | -1.0 |
Nikkei 225 | 32970.6 | 33140.5 | 0.5 |
Note: all market data contained within the article is sourced from Bloomberg unless stated otherwise, data as at 21 December 2023.
