Global equity markets advanced 6.6% in Q3, bringing YTD gains to 18.8% through early October, with emerging markets leading the way. Fixed income appreciated as interest rates fell, and alternative assets like hedge funds, private equity, and private credit posted positive returns. Our report explores these trends and provides insights on portfolio positioning amid mixed economic signals and potential election-driven volatility.
Global equity markets continued to rise in Q2 2024, while exhibiting significant sectoral and regional trends. US large-cap stocks lead the charge, driven by robust corporate earnings and favorable inflation data. Growth stocks, particularly those linked to AI, outperformed. Our report explores these and other equity market performance disparities, as well as developments in fixed income, hedge funds and private markets.
Global equity markets gained 8.1% during the quarter, led by a 10.4% rise in US large-cap stocks. Despite strong initial performances, markets retreated by 5.1% in early April amid rising US inflation and geopolitical tensions. In fixed income, the Barclays US Aggregate Index saw a 0.8% decline in Q1 and a 3.1% drop year-to-date.
In 2023, capital markets experienced robust growth, with the ACWI Index appreciating by 22.2% and major equity indexes like the S&P 500, MSCI EAFE, and MSCI Emerging Markets registering 8%-11% gains in Q4, propelled by faster-than-expected inflation declines and falling bond yields. The fixed income sector saw significant appreciation, with the Barclays US Aggregate Index up 6.8% in Q4, driven by a 70bps-80bps decline in bond yields. High-yield bonds and leveraged loans also posted strong performances, benefiting from declining base rates, spread compression, and high coupon yields. Hedge funds saw modest gains, led by convertible arbitrage strategies, while private equity and private credit sectors continued to deliver solid returns, despite a slowdown in new deal activity and a cautious outlook on defaults. Private real estate faced pricing pressures, though industrial and some high-quality office properties maintained strong fundamentals. Looking ahead, the outlook is cautiously opt
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