World Markets Review
Markets rally on rate cut expectations: Q4 roundup

Global stocks rallied sharply in the fourth quarter and ended 2023 with double-digit gains, based on the MSCI All Country World Index. Declining inflation and signs that major central banks may be done raising interest rates powered stocks higher. Strength in the U.S. economy provided a further tailwind.

Information technology stocks led markets higher. In the fourth quarter, 10 of 11 sectors in the MSCI All Country World Index gained ground. Real estate stocks staged a strong recovery after being hammered by rising interest rates over the past year. Consumer staples stocks rose but lagged the overall market, and energy stocks declined modestly amid falling oil prices. 

Bond markets rose across the board in the fourth quarter and full year. Investors welcomed central bank decisions to pause their aggressive rate-hiking campaigns. As inflation moved lower, investors and economists started to anticipate rate cuts in mid-2024, further fueling the rally.

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