by Martin Lefebvre, CIO, & Team, National Bank Investments
Highlights
- Economic Environment in 2023: The year was marked by regional banking turmoil, advances in AI, significant interest rate fluctuations, and hopes for a soft economic landing. Despite challenges, there was a strong market rebound in the last two months, leading to gains in stocks, bonds, and cash.
- U.S. Economy's Resilience: Key factors included the U.S. economy's unexpected strength, consumer spending trends despite high interest rates, and continued government economic stimulation.
- Interest Rate Fluctuations: The Federal Reserve ended the year with a high policy rate, the highest since 2001, but also indicated potential rate cuts in 2024 due to a balanced labor market and slowing inflation.
- Stock Market Performance: The U.S. stock market began 2024 close to an ideal scenario with sustainable inflation return, potential rate cuts, a robust job market, and steady earnings growth.
- Asset Class Performance: Various asset classes showed recovery in 2023, with notable gains in different sectors and regions. However, China underperformed due to economic weakness and geopolitical tensions.
- Magnificent Seven: Companies like Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla had a stellar year, significantly impacting market indices.
- Market Sentiment: Extreme optimism was observed, but it was noted that there's little room for error in such a scenario.
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