Weekly Market Update 03/01/2024

For the second year in a row, the S&P500 index has risen over 20% as the magnificent seven continued to push the index higher. In 2023 the S&P500 returned 24%, and for 2024 returned 23% despite the December sell-off as excitement surrounding AI continued to push megacap tech stocks higher. Chipmaker Nvidia ended 2024 with a gain of 172%, and Meta a gain of 65%. By contrast, Europe’s markets were more subdued, with the FTSE100 returning 5.7% and the Eurostoxx50 gaining 8.3%. The lack of megacap tech in Europe has held these markets back markedly compared to their US counterparts.

In the news this week, according to data released on Thursday by Nationwide, UK house prices rose more than expected in December, by 0.7% since November, as buyers pushed to complete purchases before the increase to stamp duty in April.  Economists had expected an increase of 0.1% over this period, with the year-on-year figure of 4.7% also exceeding forecasts and recording the highest annual increase since October 2022. Following the Budget in October, mortgage rates started to tick up in anticipation that the Bank of England will begin to lower rates slower than previously expected. However, borrowing costs are still well below their peak seen in the summer of 2023.

Andrea Wood, Chartered MCSI
Investment Manager