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Equity markets take their cue from central banks

Saira Malik
Chief Investment Officer
Office chairs and a conference table

Global equities delivered strong fourth-quarter returns, as rallies in November and December more than offset October’s decline. U.S. equity benchmarks led the way, with most posting double-digit gains, joined by non-U.S. developed markets, which outperformed their emerging-market (EM) counterparts and all-country world indexes. Although investors initially fretted over “higher-for-longer” interest rates, cooling inflation boosted market optimism that central bank tightening had peaked and lower policy rates were forthcoming. The Federal Reserve reinforced this view in December by signaling an end to its tightening cycle and projecting 75 basis points of rate cuts in 2024. Outside the U.S., central banks generally paused but did not telegraph easier policy.

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Index Performance: FactSet; European Corporate Earnings: I/B/E/S; U.S. Corporate Earnings: Standard & Poor’s; Employment: RBC Global Asset Management; Russell Indexes: FactSet, Russell Investments.

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