US stocks finished lower on the final trading day of the year but booked sharp yearly gains as inflation decelerated sharply, the economy remained strong and the Federal Reserve is set to cut rates in 2024. The S&P and the Dow booked their ninth straight winning weeks, with the S&P posting its longest weekly gains since 2004, while the Dow notched its longest weekly winning streak since 2019. In 2023, the S&P 500 added 24.7% and the Dow booked a gain of 13.7%. The Nasdaq 100 surged by 54.9%, to mark the best year since 2020 lifted by an AI-backed rally in tech companies, with Nvidia soaring 245% on the year and Meta adding 183%.
Frankfurt's DAX 40 index closed at 16,751 points on the final trading session of the year, booking an impressive yearly surge of 20% and nearing a record peak achieved earlier this month, propelled by notable gains in tech stocks and retailers. Global markets have experienced a rally since mid-December, triggered by hints from the US Federal Reserve about potential interest rate cuts next year. Furthermore, recent economic data has reinforced this possibility, indicating a slowdown in inflationary pressures and a moderation in the labor market. In Europe, Friday's data revealing an unexpected deceleration in Spain's inflation rate for December suggests that the European Central Bank might also consider rate cuts in the coming year, despite the officials' generally hawkish stance.
The S&P/ASX 200 Index fell 0.31% to close at 7,591 on Friday, retreating slightly from 20-month highs, with mining and energy stocks leading the decline amid softer commodity prices. Notable losses were seen from BHP Group (-0.8%), Rio Tinto (-0.7%), Fortescue Metals (-0.6%), Woodside Energy (-1%), Santos (-0.8%) and Northern Star Resources (-1.4%). Still, the benchmark index advanced nearly 8% in 2023, reversing losses from the previous year to end at near-record highs. Those gains came as a rebound in commodity prices lifted the resource-heavy bourse, while easing inflation and interest rate cut expectations provided additional boost. Australia’s mining, technology and healthcare sectors were among the best performers this year, while energy stocks finished the year lower on weaker oil prices.
The Shanghai Composite rose 0.68% to close at 2,975 while the Shenzhen Component gained 0.89% to 9,525 on Friday, with mainland stocks rising for the third straight session as expectations of further policy easing and attractive valuations in China prompted aggressive buying from investors. Beijing will boost domestic demand, ensure a speedy economic recovery and promote stable growth, according to an interim report on the country’s 14th five-year plan published by parliament this week. Analysts are also expecting potential reductions to the key lending rates and the reserve requirement ratio next year. Still, the Shanghai and Shenzhen indexes declined by 3.7% and 13.5%, respectively, this year, as the country’s fragile and uneven economic recovery and the lack of aggressive policy support disappointed markets. Equity benchmarks in mainland China and Hong Kong were the biggest percentage losers in major markets globally this year.
The BSE Sensex closed at 72,240, down 0.23% due to weakness in financial and energy shares. State Bank of India dropped 1.4%, while Tata Motors rose 3.5% as the top performer. In 2023, the Sensex gained 19%, continuing its eight-year streak of positive performance. It marked the second-best year since 2017, driven by robust domestic macroeconomic factors, consistent corporate profits, expected rate reductions, and increased foreign investments. Among single stocks, Tata Motors was the standout winner, doubling its stock value.
The S&P/TSX Composite index ended 0.1% higher at the 20,958 level on the last trading session of the year, as gains in oil producers were restrained by losses in mining companies, primarily influenced by lower bullion prices. Oil-backed giants Canadian Natural and Suncor both rose by 0.5%. Also, the financial sector booked gains at the end of a year where Canadian banks lagged behind their U.S. counterparts. Higher interest rates heightened the risk for Canadian loans, with the looming possibility of delinquencies. On the other hand, mining heavyweight Barrick Gold fell by 0.1%, concluding the year with a 2% loss despite the annual surge in gold prices. Considering 2023, the benchmark index for the Toronto exchange has ended 7.7% higher.
