Weekly Buzz: 📈 How the markets beat expectations in 2023

05 January 2024

The global economy proved its worth last year, with stocks and bonds defying expectations to finish on a high note. What drove this resilience?

A look back, before a look forward

Economists weren’t especially hopeful about 2023, with expectations of a recession abounding. After all, hampered supply chains were driving inflation higher, and central banks were fighting back with economy-bruising interest rate hikes.

By most accounts, stocks should’ve ended up in the dumps. Yet, US and European stock indexes have closed out the year around their all-time highs, while Japanese equities are at their highest in decades.

Mind you, it’s not just stocks that made investors breathe a sigh of relief: US corporate bonds and gold pulled in returns of around 10% each, and Bitcoin’s up some 150%.

Behind the economy’s resilience

So the world economy has held its own – so far, at least. That’s mainly thanks to a few key factors: the strength of the US labour market, US consumers leaning on their pandemic savings, companies locking in long-term loans during the pandemic, and governments sparing no expense for stimulus packages.

Improving supply chain conditions, cheaper commodities, and a weakening housing market have helped push inflation down toward the US Federal Reserve’s 2% target too. Stocks held steadier than expected, while the AI frenzy did major favours for US tech stocks.

And now with inflation finally headed toward central banks’ targets, they can start holding rates where they are – or even start bringing them back down. This potential end to interest rate hikes has also added to the spring in the market’s step.

But that doesn’t quite paint the full picture: interest rates are way above their ultra-low levels from a couple of years ago, and yet stocks are near their peaks.

The difference, then, may be down to savvy cost management (our Jargon Buster below breaks this down). Prudent firms could also be passing on higher costs onto customers to protect their bottom line, which can make their stocks look like decent bets even in trying times.

As an investor, what does this mean for me?

Investors banked on stocks rocketing in 2022, and crashing in 2023. Both times, they were wrong. There’s a lesson worth learning here: trying to predict the market is tough, and focusing too closely on the near-term market consensus probably isn’t the best bet for long-term investing success.

Instead, invest with a long-term view, towards your own financial goals. If you believe that economies will develop over time – which they tend to do as populations grow and productivity improves – then you’d also expect company profits to grow over time. Staying invested in the market with a well-diversified portfolio that fits your risk profile (consider either one of our General Investing portfolios) is hard to beat.

This article was written in collaboration with Finimize.

🎓 Jargon Buster: Cost management

Cost management is all about how companies control expenses to maximise profits – managing every penny, from the cost of materials to employee salaries. And there are plenty of ways to control costs, from finding more efficient methods, to negotiating better deals with suppliers.

The goal here: boosting financial health and increasing profits, without sacrificing the quality of products or services – it's a balancing act between spending wisely and investing smartly.

🚢 2024: Your Year to Thrive Financially!

New Year’s resolutions often don't survive much beyond February, sometimes not even past the early days of January!

That's why we prefer the Lighthouse approach – view your financial goals as commitments for the entire year, and they become beacons to guide you through your long-term investing voyage. Here’s how you can get started this year.

✨ Our Macro Outlook for 2024 

As the market consensus shifts from expectations of recession to the narrative of a “soft landing”, our CIO Stephanie Leung shares our view on its likelihood - along with growth, inflation and all things returns for next year.  A 10 minute read is all you need to stay informed.

🗓️ Save the Date

Join our co-founder and CEO Michele Ferrario and Chief Investment Officer Stephanie Leung as they share insights on the financial markets in 2024 and the likelihood of a recession in the coming months.

✨ We’ve just upgraded our app – now see your returns over various periods!

Investing is a long-term journey, filled with milestones. Keeping track of where you’ve been is just as important as planning for where you’re going. With the latest update for our app, we’ve made it easier to do just that.

On the homepage, we’ve added the ability to view your portfolio’s performance over different periods. Year-to-date (YTD), different monthly periods, and more – all in app and available now.

Please note that this feature requires the latest app version.

⬆️ Give your cash the upgrade it deserves!

Unleash the power of your savings with our ultra-low-risk cash management solution! Enjoy a projected 3.8% p.a. return without the hassle of lock-in periods or minimum investment amounts. Simple’s returns are closely tied to interest rates, so when rates go up, so does Simple’s ability to earn more on your cash. 

Whether you’re building up your emergency fund, saving up for an upcoming expense, or putting aside funds to dollar-cost average into your investment portfolios, Simple keeps your cash secure in even the most volatile market environments. Experience the freedom of flexible saving and watch your money work smarter, not harder. Start today and transform any amount into an earning opportunity – because it's that simple.

StashAway Simple™ is only available on your mobile app. Find out more about it here

Do you know that US Treasury yields are at decades-high? So it’s a good time to consider putting your cash to work in our USD Cash Yield portfolio

It lets you invest in short-term US Treasuries and earn 5.3%* p.a. on your cash. With high inflation, it’s important you manage your cash well. 

With our USD Cash Yield portfolio:

✔️ Yield in USD

✔️ No minimum or maximum investment amount

✔️ No lock-ins

USD Cash Yield is only available on the mobile app.

*The yield to maturity is provided by the fund manager and is not a guarantee for future returns. Yield as of 30 November 2023.

Share this

  • linkedin
  • facebook
  • twitter
  • email

Want more?

We thought you might.

Join the hundreds of thousands of people who are taking control of their personal finances and investments with tips and market insights delivered straight to their inboxes.