Global Markets Finish Strong in 2023: Record Highs and Positive Trends

As the curtain falls on the trading year, US futures remain stable, signaling a potentially historic end to 2023. The S&P 500 teeters on the brink of a record high, boasting a remarkable annual surge of nearly 25%, while global shares look set to close with their most impressive performance since 2019.

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On Thursday, the S&P 500 traded within striking distance of its all-time peak, reflecting a robust 2023 advance. Simultaneously, the Nasdaq 100 marked its most successful year since 1999, buoyed by expectations of a proactive stance from the Federal Reserve in interest rate cuts during 2024.

Currency markets experienced thin liquidity, leaving the dollar gauge stable and on course for its most substantial annual decline since the onset of the pandemic. Treasuries saw continued losses, with the 10-year yield climbing three basis points, though still over 100 basis points below its mid-October zenith. Meanwhile, global bonds are poised for their most significant two-month gain on record.

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Brian Barish, Chief Investment Officer of Cambiar Investors LLC, attributes the rally to the belief that major central banks have successfully curbed the inflationary surge of 2022-23. Barish notes, "It's not hard to imagine new concerns emerging for the markets, such as elections, the substantial bond funding requirements of the US government, and the possibility of a resurgence in inflation. But for now, there's not much news and not a lot of sellers."

In Europe, the Stoxx Europe 600 index witnessed a 0.3% climb, culminating in a 13% gain for the year. Trading volumes remained low, with several regional markets, including Germany and the UK, closing early on Friday. The MSCI All Country World Index celebrated a robust 20% rally throughout the year.

While warnings of overbought signals and concerns about a pullback have surfaced, the rally maintains its momentum. Quincy Krosby, Chief Global Strategist for LPL Financial, acknowledges the market's signs of fatigue but emphasizes that as long as participation remains broad, bullish sentiment should propel the indexes through geopolitical and domestic challenges, fostering optimism for a similarly strong 2024.

In the energy sector, oil is poised for its most substantial annual drop since 2020, despite conflicts and OPEC+ production cuts failing to elevate prices.

Key Market Moves:

Stocks:

• S&P 500 futures remain stable.

• Nasdaq 100 futures show little change.

• Dow Jones Industrial Average futures exhibit minimal movement.

• Stoxx Europe 600 experiences a 0.3% rise.

• MSCI World index shows marginal change.

Currencies:

• Bloomberg Dollar Spot Index remains steady.

• Euro maintains stability at $1.1052.

• British pound sees a 0.1% dip to $1.2715.

• Japanese yen exhibits little change at 141.43 per dollar.

Cryptocurrencies:

• Bitcoin rises by 0.9% to $42,842.57.

• Ether sees an 0.8% increase to $2,365.89.

Bonds:

• 10-year Treasuries yield advances by three basis points to 3.88%.

• Germany's 10-year yield rises by six basis points to 2.01%.

• Britain's 10-year yield climbs by four basis points to 3.54%.

Commodities:

• West Texas Intermediate crude experiences a 0.4% rise to $72.09 a barrel.

• Spot gold remains largely unchanged.

Also Read: Mixed Outlook for U.S. Stocks as 2023 Nears Its End; Market Hopes for Rate Cuts