Q1 2024 global market update

17 April 2024

When 2023 drew to a close, all six of the stock market indices below ended the year having registered positive growth.

Now that the first quarter of 2024 is over, you may be pleased to learn that each of them maintained its upward trajectory in the first three months of the year.

Source: J.P. Morgan

Keep reading to learn what investors need to know about market performance in the UK, US, Asia, and Europe over Q1 2024.

UK

With inflation steadily beginning to decline, it seems UK investors are holding a positive outlook for the year ahead.

At the end of 2023, the Office for National Statistics (ONS) reported that inflation stood at 4%. By the end of Q1, the ONS had reported a decline to 3.4% in the year to February 2024. It’s important to note that the ONS has since reported that inflation fell again to 3.2% in the year to March 2024.

As a result, the Bank of England’s (BoE) Monetary Policy Committee (MPC) elected to maintain the base rate of interest at 5.25% (as it has done since August 2023) rather than increasing it.

Both these elements are welcome news for investors, but as you can see from the above table, the UK FTSE All-Share did not perform as favourably as its US, European, and Japanese counterparts. This could be down to:

• Poor performance in the UK economy. Reuters reports that the UK entered a recession in the second half of 2023.
• A lagging gilt and bond market. J.P. Morgan reports that UK gilts fell by 1.8% over the quarter.
• An unenthusiastic regard for the chancellor’s Spring Budget. Schroders reports that the “muted” response to Jeremy Hunt’s Spring Budget could indicate that investors were expecting bolder announcements from the chancellor, especially in the run-up to a general election.

So, while the FTSE All-Share posted positive returns to the end of Q1 2024, these results may be considered somewhat disappointing in comparison to other global indices.

US

Despite the country ramping up for what is set to be a controversial election this November, with former president Donald Trump emerging as the top candidate for the Republican Party this quarter, the US S&P 500 ended Q1 with a 10.6% return.

Indeed, although the Federal Reserve (Fed) maintained central interest at a rate of between 5.25% and 5.5% as it has done since the summer of 2023, CNBC says, this did not appear to deter investors.

Schroders reports that “Gains were supported by some well-received corporate earnings as well as ongoing expectations of rate cuts later this year.

“The pace of monetary policy easing is likely to be slower than had been expected at the end of last year, given resilient US economic data, but this did little to dampen appetite for equities.”

Interestingly, after a bumper year for the “Magnificent Seven” large-cap tech stocks in the US, only four of these companies – Nvidia, Microsoft, Amazon, and Meta – outperformed the S&P 500 in Q1, with Tesla declining by nearly 30%, Forbes reports.

Outside of markets, the US Bureau of Labor Statistics reports that unemployment remained at 3.8% over the quarter, having wavered between 3.7% and 3.9% since August 2023.

Eurozone

The MSCI ex-Europe index saw a 9.7% gain across the first quarter of 2024 – a continuation of its 6.7% rise in Q4 2023.

Schroders reports that an “ongoing optimism over demand for Artificial Intelligence (AI) related technologies” led the way for the eurozone’s success over the quarter, along with declining inflation. Eurozone inflation fell to 2.6% in the year to February 2024, although the European Central Bank (ECB) has not yet decreased its central interest rate in response.

While it is unclear whether the ECB, along with the Fed and BoE, will cut central interest rates in light of the falling rate of inflation, investors may benefit if this happens in Q2.

Asia

Japanese markets have had an extremely strong 12 months, and Q1 2024 was no exception. After returning 28.3% in 2023, the Japan TOPIX continued its rally with an 18.1% yield in the first quarter of this year.

Its growth has been largely driven by the technology sector, particularly the automotive industry, along with the rise of AI pushing up demand for semiconductors (used in technology manufacturing).

Interestingly, in March, the Bank of Japan (BoJ) raised its central interest rate for the first time in 17 years. Having lowered the rate to -0.1% in 2016, in order to reinvigorate its stagnating economy, the country now has a key rate of between 0% and 0.1%.

According to the BBC, this means that there are now no countries with negative interest rates.

Outside of Japan, Schroders states that “Taiwan, India, and the Philippines were the strongest markets in the MSCI Asia ex-Japan index, while Hong Kong, Thailand, and China ended the quarter in negative territory”.

Investors outside of China remain cautious over the country’s economic circumstances, with Statista reporting that Chinese inflation dipped to -1% in the year to March 2024.

Working with a financial planner could help you achieve your investment goals

As we emerge from a turbulent few years, it appears that overall market performance is beginning to look up.

While we can never truly predict which way the wind will blow, now may be the time to discuss your investment goals with a financial planner.

Email info@depledgeswm.com or call 0161 8080200 to get started.

Please note

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance. Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.