2023-12-30 01:33:07
Its shadow hovered over the markets all year long, but ultimately investors saw it almost nowhere: recession was avoided in 2023, which greatly benefited stock market indices.
“If we look at our forecasts from last year, we thought that the year 2023 would revolve around the recession in the United States. We were wrong,” admits Colin Graham, head of multi-asset strategy at Robeco.
In the third quarter, growth in the American economy, the largest in the world, amounted to more than 5% at an annualized rate.
In Europe, the trend is much less encouraging: over the first three quarters of 2023, growth in the countries of the European Union is 0.2%, and that of the euro zone, 0.1%.
The strength of the American economy is essentially due to the strength of consumers, who have so far ignored both inflation and the rise in interest rates, indicates Vincent Juvyns, analyst at JP Morgan Asset Management. Result: following a difficult 2022, the stock markets have rebounded. The MSCI World index posted a gain of 22% over the year, compared to a loss of almost 20% last year.
Over the whole of 2023, the Paris Stock Exchange gained 16.52%, Frankfurt, 20.31% – both having established a new record – Milan, 28.03%, and Madrid, 22.76%. Only London gained only 3.78%.
In Asia, Tokyo had its best year in 10 years (+28.2%), and reached its highest levels in 30 years.
In the United States, the Dow Jones index reached a new closing high on Thursday, while the S&P 500 is approaching its all-time high from January 2022.
The “Magnificent Seven”
But, within stock market indices, the kings of 2023 are undoubtedly companies linked to artificial intelligence (AI).
Leader in the semiconductor market used for the development of generative AI, the American Nvidia saw its value more than triple on the stock market, reaching 1,220 billion US dollars, making it the sixth company in the world in terms of of market capitalization.
Along with US tech titans Alphabet, Amazon, Meta, Apple, Microsoft and Tesla, Nvidia forms the “Magnificent Seven” group, mega-caps that will account for much of the rise in stock markets in 2023.
Only the Chinese stock markets have struggled this year – the MSCI China index losing more than 15% -, abandoned by investors due to an economic recovery less dynamic than expected, the fragilities of real estate and the absence of massive recovery plan from the authorities.
But at the global level, growth, as well as unemployment figures, which are still very low, have not always been well received by investors, because it also implies more difficulties for central banks in their fight once morest inflation. .
With their decision on key interest rates or their interventions through repurchases or sales of assets, central banks make rain and shine on the markets. Their decisions and debates are therefore constantly scrutinized. The American Federal Reserve (Fed) even had to intervene in March 2023 to reassure the population and prevent the bankruptcy of three regional banks in the United States from leading to panic throughout the global financial system.
Although the pace of price increases slowed over the year, central bankers refused to relax their policy, tightening it further in September, pushing back the prospect of a rate cut, so hoped for by investors.
The belief that rate cuts will occur in the first months of 2024 finally took shape in November, allowing global stock indices to experience their best month in three years, and leading to a drastic fall in market borrowing rates .
“The fact that the market anticipates that central bank rates can fall without there being a phase of recession in the economy has had a direct impact” on the markets, explains Christopher Dembik, investment strategy advisor at Pictet AM.
This movement also benefited small companies, hitherto neglected by investors, which widened a large valuation gap with multinationals during the year.
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