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Stocks grab a lead at the half

12 July, 2023
clock 16 MIN READ

Global equity markets put up big scores in both the second quarter and the first half of 2023, amid periods of volatility. Markets were buoyed by a sharp rally in technology stocks, investors’ optimism regarding generally favorable economic data, as well as the resolution of the politically charged debt-ceiling standoff in the U.S. These positive contributors offset concerns about tighter central bank monetary policy and the stability of regional banks. Developed markets outperformed emerging markets during the quarter.

North America was the top-performing region among developed markets for the quarter due primarily to strength in the U.S. Pacific ex Japan was the primary market laggard due to weakness in New Zealand and Singapore. Eastern Europe led the emerging markets, benefiting mainly from strong performance in Hungary, Poland, and Greece. Latin America also performed well during the period. Conversely, emerging markets in the Far East posted negative returns, hampered by a downturn in China amid investors’ worries about relatively weak economic data1.

President Joe Biden and Kevin McCarthy, Speaker of the U.S. House of Representatives, reached an agreement on raising the $31.4 trillion debt ceiling during the last week of May. Both the U.S. House of Representatives and the Senate passed the legislation—the Fiscal Responsibility Act—by wide margins, with strong support from Republicans and Democrats. The bill suspends the debt ceiling through January 1, 2025, maintains non-military spending close to current levels for the 2024 fiscal year, which begins in October, and implements a 1% cap on increases in non-military spending for the 2025 fiscal year. The fast-track approval of the legislation, which Biden subsequently signed into law, enabled the government to avoid a potential default on its debt on June 5, the “X-date” on which Treasury Secretary Janet Yellen had warned that the U.S. would no longer be able to meet its financial obligations. 

1  All equity market performance statements are based on the MSCI All-Country World Index (ACWI).

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