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Investment insights from Capital Group

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

Global stocks rallied, boosted by strong U.S. economic growth, declining inflation and signs that major central banks around the world may be done raising interest rates. Stocks moved sharply higher as officials at the U.S. Federal Reserve (Fed), the European Central Bank (ECB) and other key institutions indicated that further interest rate hikes may not be needed amid moderate consumer price increases and low unemployment levels.

Information technology stocks led markets higher, rising nearly 18%. Ten of 11 sectors in the MSCI All Country World Index gained ground. Real estate stocks also 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 as 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 fuelling a rally in nearly all segments of the bond market.