The first quarter of 2024 was positive for developed equity markets with strong economic data boosting investor sentiment and volatility remained low. While the US is closer to the 2% inflation target than the UK and Europe, recent US inflation data has proved stickier. The implied number of US interest rate cuts for 2024 has reduced from six/seven interest rate cuts at the end of 2023 to two/three interest rate cuts, starting in the summer.

Global fixed income produced negative returns during the quarter, impacted by the macro backdrop (stubborn US inflation and resilient growth), with fading prospects for aggressive interest rate cuts resulting in higher bond yields. Other interest rate sensitive asset classes, such as real estate, also suffered on the back of higher interest rates. In commodity markets, the fall in gas prices was more than offset by a rise in oil prices on the back of ongoing supply cuts and geopolitical tensions.

Equities, bonds, and commodities recorded gains in March. The UK FTSE 100 Index (large companies) outperformed other developed and emerging markets during the month led by mining stocks as a result of higher oil prices, supported by the growth outlook and further production cuts from the world’s largest producers. US equities also had a positive month, with smaller companies performing better than large technology companies, along with emerging markets, aided by better economic activity data from China.

Developed market equities had a strong first quarter due to the performance of large cap US growth stocks, particularly the AI focussed companies, Nvidia, Microsoft, Meta and Alphabet, Amazon, while the share prices of Tesla and Apple declined.

The best performing equity market during the first quarter in local currency terms was once again Japan, despite changes to its monetary policy in March. After decades of deflation and stagflation, the Bank of Japan hiked interest rates for the first time in 17 years from -0.1% to 0.1%, aiming to achieve 2% inflation in the coming year.

European equities achieved attractive returns during the quarter boosted by good company results, however performance lagged the US and Japan. A group of eleven internationally exposed quality growth companies achieved the strongest gains over the past twelve months, including GSK, Roche, ASML, Nestle, Novartis, Novo Nordisk, L’Oreal, LVMH, and AstraZeneca. The high concentration of stock market gains in the US and Europe has given rise to concerns about concentration risk, however, the diverse sectors represented in this group of European stocks may insulate the market to some extent. The outlook for the European equity market is supported by cheaper valuations relative to the US and positive economic growth potential.

Although UK equities performed strongly in March, returns for the first quarter were behind most global peers. The UK market suffered due to its value bias and poor economic performance.  Although falling into a technical recession at the end of 2023, the recession proved shallow. The Chancellor, Jeremy Hunt, delivered the 2024 Budget in March and set out the government’s spending and changes to taxation, which included a 2% cut to employee National Insurance which follows a previous cut made in the 2023 Autumn Statement. While UK inflation continued to fall, still elevated service inflation and wage growth meant the Bank of England held its base interest rate unchanged at 5.25%, reiterating that policy will need to ‘remain restrictive for sufficiently long’ to return inflation to target. UK government bonds (gilts) came under pressure as a result.

Emerging market equities underperformed developed markets this year. China continues to face a property crisis, which is affecting consumer spending and lending, as well as economic growth. Real estate is expected to remain the main drag on China’s economic growth in 2024.

As the general market focus appears to have shifted from inflation/interest rates to economic growth, company earnings will be a key factor to monitor. The new record high for gold prices, a traditional safe haven, suggests that risks still remain including economic, environmental, political and geopolitical. Stocks offering attractive dividend yields may be a source of resilience while fixed income assets appear well positioned in the case of an adverse growth shock.


Market Performance 2024 Year to Date
FTSE All-Share +3.57%
FTSE World ex-UK +9.77%
FTSE Actuaries UK Conventional Gilts All Stocks -1.62%
FTSE Actuaries UK Index-Linked All Stocks -1.81%


Total returns in GBP to 29/032024


Key Rates  
Bank of England Base Rate 5.25%
Inflation (Retail Price Index/Consumer Price Index)* 4.50%/3.40%


  *February 2024

Source of data: FE Analytics,,

The content contained in this article represents the opinions of MacIntosh & James Partners Ltd. The commentary in no way constitutes a solicitation of investment advice and should not be relied upon in making investment decisions. Past performance is not a reliable indicator of future results. The value of your investments can fall as well as rise and are not guaranteed.