Q4 2023 Roundup: Don’t Miss These Essential Insights
Q4 of 2023 was an interesting time for investors
Here’s our roundup of insights on trends, market performance and economic factors, which could help you make more informed decisions going into 2024. Let’s start with the UK markets.
Market buzz 📈
UK equities rocked the quarter, with small and mid-cap indices stealing the spotlight. Domestically focused stocks soared on hopes that interest rates might settle. Plus, smaller UK companies are gaining international attention with a boost in "inbound" bids.
Sectors sizzle 🔥
A round of applause for the industrial and financial sectors. They aced the internationally exposed game, but larger companies faced a bit of a challenge as the sterling flexed against a weak US dollar.
Inflation dip 💸
Hold onto your hat – UK inflation dropped to 3.9% in November, sparking hopes that the Bank of England might wrap up its interest rate hike series. Fingers crossed, eh?
Economic whirlwind 🎢
Quick twist in the GDP tale – revised data from the ONS shows a Q3 tumble, shaking up the zero-growth narrative.
Hopping over to the USA…
Market momentum 🚀
US shares soared in the final quarter, riding high on expectations of looming interest rate cuts. The S&P 500 index finished the year just shy of its record high from early 2022.
Inflation check 💹
Keeping a keen eye on inflation, the US annual rate (consumer price index) eased from 3.7% in September to 3.1% in November. The Federal Reserve's preferred inflation measure, the core personal consumption expenditure index, showed a softer-than-expected 0.1% increase in November.
Economic landscape 🌐
A quick spin in the GDP dance – Q3 economic growth was revised down to an annualised rate of 4.9%, nudging lower from the earlier 5.2%.
Sector spotlight 🔍
US shares rallied on the buzz of impending rate cuts. Top performers? Information technology, real estate, and consumer discretionary. On the flip side, the energy sector took a hit with weaker crude oil prices.
Finally, let’s see what happened across the EU in Q4 of 2023.
Market surge 🌊
Eurozone shares had a powerful final quarter, with the MSCI EMU index climbing a robust 7.8%. The anticipation of no further interest rate hikes fueled the momentum.
Real estate and information technology led the charge as top-performing sectors, while healthcare and energy faced headwinds with negative returns.
Inflation insights 🎈
Softer inflation figures from both the Eurozone and the US were the market's cheering squad. The Eurozone's annual inflation dipped to 2.4% in November from 2.9% in October, a significant drop from the 10.1% a year prior.
The whispers are that interest rates might not only have peaked but could even see some cuts in 2024.
Economic rollercoaster 🎢
On the economic front, Eurozone GDP took a slight dip of 0.1% quarter-on-quarter in Q3, according to Eurostat data. The HCOB flash eurozone purchasing managers' index (PMI) in December hinted at a possible contraction in Q4, with a reading of 47.0.
Sector spotlight 🔍
Most sectors embraced the optimism surrounding future rate cuts. Real estate thrived with the promise of cheaper debt, and IT stocks, fuelled by future cash flows and earnings, also shone.
Economically sensitive sectors like industrials and materials saw strong gains. However, the energy sector faced a downturn with weaker oil prices, while stock-specific factors weighed on healthcare.
Still with us? Good. Here are some of the best-performing stocks from Q4.
Microsoft (MSFT)
NVIDIA Corp. (NVDA)
Meta (META)
Apple (AAPL)
Amazon (AMZN)
Tesla (TSLA
Alphabet (GOOGL)
Do any of these come as a surprise to you? By the way, you can invest in all of these stocks with Wombat! Capital at risk.
Before we wrap up, let’s get into some specifics regarding stocks and industries.
Magnificent Seven standouts 🦸♀️
Let's kick things off with the Magnificent Seven. Apple (AAPL), Nvidia (NVDA), and Microsoft (MSFT) stole the show, leading the market with impressive year-to-date returns.
Their dominance isn't just due to stellar performances but also because of their hefty weightings within the index. It's safe to say they've been the talk of the town.
Energy sector's grand performance ⚡
In the sector showdown, communications and financial services managed positive gains, but the real MVP this quarter?
Energy. The energy sector stole the spotlight with a jaw-dropping 12.5% surge, thanks to a whopping 30% rise in oil prices. While energy stocks didn't fully keep up with oil prices, the market's expectations for sustained high oil prices might be in question.
The Tech sector saga 🖥️
The tech sector had a bit of a rollercoaster. A sell-off brought the price to fair value down to 0.98, just under fair value. It's a signal – time to shift technology to more of a market weight.
Last quarter, it was riding a 7% premium, but recent events, combined with fair value adjustments, have recalibrated the landscape. Keep an eye on Nvidia; they've got some interesting moves in the artificial intelligence realm.
Communications unveiled 📡
While communications had its moment in the spotlight, it's no longer the underdog. The real estate sector now wears the crown as the most undervalued, trading at a slight discount.
Concerns about commercial real estate and rising interest rates led the way. Office space? A potential landmine. But beyond that, we see a sector that might have been brought down a tad too much by the market.
Now that you’re fully clued up on Q4 from last year, it’s time to start looking ahead to this year. And what better place to start than with some of our ETFs, which cover these top-performing sectors.
Capital at risk. This is not financial advice.
Join the Metaverse — Meta, Nvidia, EA Sports, Apple
The AI — Alibaba, Samsung, Google, Intel
The British Bulldog — HSBC, GSK, Unilever, BT, Vodafone
All American — Visa, Coca Cola, McDonalds, Walmart
