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Global market performance diverges amid volatility

February 12, 2024
clock 7 MIN READ

Despite periods of volatility, developed equity markets finished in positive territory in January 2024, as investors’ optimism about the global economy offset concerns regarding geopolitical tensions in the Middle East and Ukraine. Meanwhile, emerging markets recorded negative returns for the month. North America led the major developed markets in January due to strong performance in the U.S., which offset a downturn in Canada. The Pacific ex Japan region was the primary market laggard due mainly to weakness in Hong Kong and Singapore. Europe was the top-performing region within emerging markets for the month, led by strength in Greece and Hungary. Conversely, Chinese stocks posted the most notable losses among emerging markets in January.1 

Global fixed-income assets, as represented by the Bloomberg Global Aggregate Bond Index, declined 1.4% in January. High-yield bonds saw flat performance for the month, but led the U.S. fixed-income market; corporate bonds and U.S. Treasury securities recorded modest losses.2 Treasury yields moved somewhat higher for all maturities greater than one year. Yields on 2-, 3-, 5- and 10-year Treasury notes increased 0.04%, 0.04%, 0.07% and 0.11%, respectively, over the month. The spread between 10- and 2-year notes narrowed from -0.35% to –0.28% in January, and the yield curve remained inverted.3 

As widely anticipated, the Federal Open Market Committee (FOMC) maintained the federal-funds rate in a range of 5.25% to 5.50% following its meeting on January 30-31, but cited progress in slowing inflation. In a statement announcing the continuation of the pause in its rate-hiking cycle, the FOMC appeared open to interest-rate cuts later this year, noting that “the risks to achieving [the Fed’s] employment and inflation goals are moving into better balance.” However, the central bank cautioned that rate cuts are not imminent, as it “does not expect it will be appropriate to reduce the target [federal-funds] range until it has gained greater confidence that inflation is moving sustainably toward 2 percent… The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.” 

On the geopolitical front, the U.S. and U.K. (with support from Australia, Bahrain, Canada, and the Netherlands) conducted airstrikes on several targets in Yemen in the early morning of January 23 (local time in Yemen). The military action was in response to Houthi rebel attacks on commercial shipping in the Red Sea off the coast of Yemen. The Houthi movement is an Iran-backed militant group that seized Sanaa, Yemen’s capital, in 2014. The group has attacked U.S. military bases in Iraq and Syria, as well as numerous commercial ships in the Red Sea, forcing international shipping companies to reroute their vessels around the Cape of Good Hope in South Africa, putting upward pressure on freight costs. In late January, an Iran-backed militia group conducted a drone attack at a U.S. military base in Jordan, killing three U.S. troops. President Joe Biden indicated that the U.S. would retaliate for the attack.

Global commodity prices, as measured by the Bloomberg Commodity Total Return Index, moved modestly higher in January. The West Texas Intermediate and Brent crude oil prices initially spiked in response to the military action in Yemen before retreating, ending the month with gains of 5.9% and 4.6%, respectively. Oil prices also benefited from energy firms’ larger-than-expected draws of crude oil from storage. The New York Mercantile Exchange (NYMEX) natural gas price fell 9.8% in January amid declining demand due to aboveaverage winter temperatures in the U.S. The gold spot price fluctuated, falling amid the rise in U.S. Treasury yields (the gold price typically moves inversely to bond yields) for most of the month before rallying during the last week of January in response to relatively strong U.S. economic data and declining Treasury yields. The gold price ended the month with a modest loss of 0.2%. The 5.2% decrease in wheat prices during the month was attributable to relatively weaker demand for exports from the U.S.4


1All equity market performance statements are based on the MSCI ACWI Index. 

2According to the Bloomberg US Corporate High Yield Index, the Bloomberg US Corporate Index, and the Bloomberg US Treasury Index.

3According to the U.S. Department of the Treasury. February 1, 2024.

4   According to market data from The Wall Street Journal.


This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding SEI’s portfolios or any stock in particular, nor should it be construed as a recommendation to purchase or sell a security, including futures contracts. 

There are risks involved with investing, including loss of principal. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Narrowly focused investments and smaller companies typically exhibit higher volatility. Bonds and bond funds will decrease in value as interest rates rise. High-yield bonds involve greater risks of default or downgrade and are more volatile than investment-grade securities, due to the speculative nature of their investments. 

Diversification may not protect against market risk. Past performance does not guarantee future results. Index returns are for illustrative purposes only and do not represent actual portfolio performance. Index returns do not reflect any management fees, transaction costs or expenses. One cannot invest directly in an index. 

Information provided by SEI Investments Management Corporation, a wholly owned subsidiary of SEI Investments Company (SEI)

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