Global stock markets generated impressive returns in Q1. Particularly in the US, markets were propelled higher by the anticipation of an AI-driven productivity surge, which surpassed concerns regarding higher interest rates and the uncertainty created by the upcoming US elections.

Q4, like much of 2023, defied many expectations. The Federal Reserve's efforts to combat rampant inflation through interest rate hikes have dominated headlines with predictions of a potential recession in the U.S. economy. However, the economy exhibited remarkable resilience, and as inflation gradually subsided, the Fed not only refrained from further tightening but began hinting at dropping rates soon. This unexpected turn of events led to a massive rally in U.S. stocks in Q4, with the total market index Russell 3000 up 12.07% in the quarter.

Global equities hit a stiff headwind in Q3 2023, with the MSCI All Country World IMI Index dipping -3.4%. Rising bond rates, mortgages over 7%, higher oil, plunging factory orders, Chinese deflation, and a UAW strike all contributed to a reversal of the winning streak we had experienced for much of 2023.