Diversified investors had more reasons to smile as the markets began this year exactly as they left off last year - with another strong gain by most international share markets.
In the absence of any major new economic or geopolitical shocks, investment sentiment continued to be closely linked to changes in the inflation and interest rate landscape. On that front, the first quarter of 2024 saw another discernible shift in inflation and interest rate expectations.
Initially, markets were anticipating central banks would act relatively quickly to begin lowering interest rates this year. However, these expectations were gradually scaled back. Despite indications of inflationary pressures generally easing, a stubborn inflation reading in the US tempered the US Federal Reserve’s enthusiasm for interest rate cuts.
