Global equity markets put up big scores in both the second quarter and the first half of 2023, amid periods of volatility.
Stocks grab a lead at the half
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 data.1
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).
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 and is intended for educational purposes only. 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. ,
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