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Article | 03 January 2024 | Investments
4.4%S&P 500 |
3.2%EURO STOXX 50 |
3.7%FTSE 100 |
3.2%CAC 40 |
3.3%DAX 30 |
5.1%BEL 20 |
2.1%FTSE MIB |
0.4%IBEX 35 |
-0.4%TOPIX |
| Source: Bloomberg 29.12.2023 |
Markets hailed the pivot point in interest rates, after dovish commentary from US Federal Reserve chair Jay Powell. Expectations that rates would be cut multiple times in 2024 ignited a surge in financial markets. Equities enjoyed a risk on ‘Santa rally’, led by the growth sector. Gains for the Nasdaq index topped 50% for the year to date. Government bond markets followed suit and the yield on the benchmark US 10 year bond tumbled more than 115 basis points, as prices jumped. Meanwhile, volatility expectations fell sharply, as the VIX or ‘fear’ index dipped to multi-year lows.
Tech giant Nvidia, the standout performer among the Magnificent 7 over 2023, was revealed as a leading investor in the future of AI (artificial intelligence). The company saw demand soar this year for its GPUs (graphics processing units), the high powered semiconductors required for chatbots such as ChatGPT. Nvidia is doubling down on the new technology, as the success of the companies it has invested in should further boost demand for its chips. Meanwhile, in a strangely circular development, ChatGPT creator OpenAI announced it is looking to develop its own GPUs.
After protracted negotiations, COP28 closed with an acknowledgement of the need to transition away from fossil fuels, so as to achieve net zero by 2050. The final text outlined that climate finance, which is designed not only to hold back climate change, but also to mitigate its impacts, will “need to increase manyfold”. COP28 had been hailed as a ‘chequebook COP’, when decisions would be made on loss and damage compensations for the countries most impacted by the changing climate. The eventual fund amounted to less than $1 billion, merely an ‘initial downpayment’, according to one interested party.
