The investment markets

Dovish expectations


Global equity markets reversed the third quarter narrative delivering positive returns for the fourth quarter. Quarter four performance hinged on the expectation that interest rate increases may finally be halted, with many market participants even anticipating rate cuts, which buoyed confidence.


Fears of a US recession were allayed by resilient labour markets and a robust consumer. Shares rallied strongly on expectations of imminent rate cuts. Top performing sectors were information technology, real estate and consumer discretionary. The energy sector reversed last quarter’s performance, delivering a negative return, with crude oil prices weaker over the quarter. The S&P 500 posted returns of 11.7% with the performance largely driven by the so called ‘’magnificent seven’’ tech and AI stocks.


The UK equity market was up 3.2% with small and mid-cap indices outperforming larger stocks. Inflation softened more than expected with the consumer price index dropping to 3.9% in November.

Asia ex Japan

Equities gained in the fourth quarter on hopes that US interest rates may have peaked. All markets in the MSCI AC Asia ex Japan index ended the quarter in positive territory except China which is still facing an ongoing real estate crisis and uncertainty over its regulatory regime.

Emerging markets

Emerging market equities returned 7.9%. Poland was the top performer over the quarter as markets welcomed Donald Tusk’s election as prime minister. Taiwan & Korea rallied on the back of tech-related performance. South Africa had a positive performance supported by an easing in load shedding. Countries that had negative returns included China, Turkey and Kuwait.

Global bonds

It was a positive quarter for the fixed income asset class as markets priced in easing conditions and government bond yields fell across the board. The US 10-year Treasury yield fell from 4.57% at the end of quarter 3 to 3.87% at the end of quarter 4. The UK 10-year gilt yield fell from 4.44% to 3.54%, while the German 10-year Bond yield ended the quarter 0.81% lower at 2.03%. November was the best month on record for Bloomberg’s Global Aggregate Bond Index since 2008.


On the local front, a number of key economic indicators surprised on the upside in the fourth quarter. Headline inflation dropped from 5.9% in October to 5.5% in November. Shares in the industrial, mining and manufacturing sectors delivered stronger than expected returns.

However the outlook remains constrained by failing infrastructure, the rising cost of doing business and the poor fiscal outlook. Rising debt service costs, wage increases, ongoing bailouts of failing municipalities and state-owned enterprises, as well as social support in the form of grants, all place a heavy burden on the fiscus. The lower levels of load shedding in the fourth quarter brought only temporary relief. Against this backdrop, for the last quarter of 2023 the FTSE/JSE All Share returned 6.9%, Financials 12.4%, Industrials 5.9%, Bonds 8.1%, Property 15.9% and Resources 3%.

Domestic (rand-denominated) fund returns