From yield concerns to record highs
Rate cut expectations pared back
Inflation has moderated considerably in all regions globally, leading market participants that previously predicted aggressive cuts in policy rates to start the year, to recalibrate. At the peak in January many assumed 6 cuts for both the U.S. and Canada throughout 2024. The bond future markets have pared back the expected number of rate cuts since then, though the timelines for the first rate cut is slightly different by region.
Successful earnings season in the U.S.
Mega cap companies broadly met or exceeded earnings expectations, contributing to increasingly strong investor sentiment in the markets. It was not only in the S&P 500, but also globally, as equity indices are making new record highs. On Feb. 22, major equity indexes in the U.S., Europe, and Japan reached new record highs.
Japanese rally continues and China rebounds
The Japanese market continued rising despite a weaker than expected fourth quarter GDP growth, as robust corporate earnings growth expectations have driven the recent equity rally. The Nikkei Index made a record high on February 22. It has been 35 years since previous time back in 1989.
