Performance of world stock markets 2023

Most major stock markets from the US, Europe, Japan to India grew last year, except Hong Kong and China.

Global stocks were mostly lower on the last trading day of 2023 on December 29. However, most had impressive yearly performance (percentage point gain) thanks to strong gains in the last two months, as investors bet on central banks cutting interest rates.

In the US, the final trading session fell 0.3% but the S&P 500 ended 2023 at a near record high since January 2022, up 24.2%. The 'Magnificent 7' group - Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla - accounted for about two-thirds of the S&P 500's gains this year.

"This has been a pretty extraordinary run over the last eight weeks or so for the S&P 500, so I'm not surprised to see a little more of a correction over the last few days," Edward Jones investment strategist Mona Mahajan told CNBC .

The Dow Jones also rose more than 13%, led by graphics chip giant Nvidia, which rose 240%. In 2022, the S&P 500 and Dow Jones rose 19% and 8.8%, respectively. The Nasdaq also had a great year, rising 43%.

European stocks ended 2023 slightly higher, marking their best annual performance since 2021. Specifically, the regional representative index Stoxx 600 rose 12.74%, reversing the 12.9% decline in 2022.

The Stoxx 600 has recovered from its March lows, when global markets were rocked by the rapid collapse of Credit Suisse (Switzerland) and mid-sized US bank Silicon Valley Bank (US).

In the region, Germany's DAX has risen 20% this year despite a gloomy economic picture. France's CAC 40 and Britain's FTSE 100 have risen 16.52% and 3.78% respectively. However, the best performers have been Italian stocks, with the FTSE MIB up 28.03%. The country's total stock market capitalization accounts for 39.4% of the economy.

In Asia, markets have been mixed this year. After a slump in 2022, the Nikkei 225 has risen more than 30%, its fastest pace in a decade, closing 2023 at 33,464.17 points - its highest since 1989. The rally was supported by higher profits for exporters as the yen weakened against the dollar.

"Japanese companies have been very successful in improving profit margins through cost shifting and portfolio restructuring, such as cutting non-growth parts of their business to make them more attractive to investors," said Maki Sawada, strategist at Nomura Securities.

Down 0.4% in the final session of the year, Australia's S&P/ASX 200 is up 6.2% this year. India's Sensex has performed better, up more than 18% this year.

Meanwhile, Hong Kong's Hang Seng Index has fallen 13.8% this year, its first losing streak in four years since 1969. In Shanghai, which ended the year in the green, the Shanghai Composite Index is down 3.7% this year. The CSI 300, the combined index of the Shanghai and Shenzhen exchanges, is down 11.4%.

Stock trading at Yuanta floor in District 1, March 2021. Photo: Quynh Tran — Stock trading at Yuanta floor in District 1, March 2021. Photo: *Quynh Tran*

Most Southeast Asian stock markets – except Vietnam and Indonesia – have been hit by the China effect. Thailand’s SET index fell 15.2%, heavily reliant on Chinese tourism and the economy, making it the worst performer among major Asian markets.

Forecasting the market's performance in 2024 , market strategists predict that the strong performance on US exchanges will continue into next year, based on historical experience. Specifically, data from 1950 by LPL Research shows that years after the S&P 500 rose by 20% or more, it still increased by an average of 10%. Adam Turnquist, Chief Technical Analyst at LPL Financial, calls it "momentum begets momentum".

"What we continue to care about is solid earnings for next year. There may be some short-term pain but there will definitely be long-term benefits," commented Adam Turnquist.

For Japan, the combined net profit of top Tokyo-listed companies is expected to rise 12% in the fiscal year ending March 2024, according to Nikkei, the second-highest annual gain on record.

Ben Powell, Asia-Pacific investment strategist at BlackRock (USA), assessed that Japanese corporate reforms have started to boost market performance. "And we think that will continue," he said.

The asset manager also has a positive view on India, which has become a place for investors to put money as China's stock market has struggled over the past 12 to 18 months.

India’s appeal is not just as an alternative to China. For investors looking for long-term growth in Asia, investing in India now makes sense, says Thomas Taw, head of Asia-Pacific ETF strategy at BlackRock.

On a global scale, Samy Chaar, chief economist at Lombard Odier, said there were many favorable signals for 2024. "The positive momentum in the market is clearly related to the possibility of interest rate cuts, so the question now is, how long can this trend last?", said Samy Chaar.

Phien An