A financial review of 2023 and Outlook for 2024 – Matthew Burgess, Evelyn Partners

Date posted: 22nd Jan 2024

By Matthew Burgess, Investment Manager at Evelyn Partners.


It was a bumpy ride for investors in 2023. We entered 2023 with talk of most major economies at or near recession and there seemed to be little cause for celebration. Uncertainty around the future paths for inflation, interest rates and growth led to market volatility and affected investor sentiment. But as 2023 came to a close a more optimistic outlook for investors emerged as forecasters who had predicted more gloom, following 2022’s successive rate hikes, were proven wrong.

Inflation and interest rate raises continued to dominate the financial news over the year but the positive news about potential  interest rate cuts in 2024 in the final few months of the year help spurred equity and bond markets.


Past performance is not a guide to future performance. Source FE Analytics. Benchmarks in GBP.

As seen from the above graph, the US shown by the S&P 500 led the charge last year retuning 18.58% over the 12 months which was higher than the MSCI Word index which returned 16.81%. The UK stock market had a weak start to the year thanks to commodity prices falling and the banking sector being hit by the collapse of Silicon Valley Bank (SVB) followed by struggles at Credit Suisse and retuned 7.66% over the year.

The Fed’s, the US Central Bank, December economic projections now show three rate cuts by the end of 2024. If history is any guide, the state of the economy will be an important determinant of equity performance. Since 1974, the Fed has delivered eight interest rate cutting cycles, with a recession materialising on four occasions. When the US economy managed to avoid a recession during these cycles, the S&P 500 rose by an average of 18% over the following 12 months.[1] However, when the economy fell into recession, the stock market fell by an average of 8% over the same time frame.2

Artificial Intelligence (AI) also dominated the news in particular the so-called magnificent seven stocks of Alphabet (formerly Google), Apple, Amazon, Microsoft, Meta (formerly Facebook), chip-producer Nvidia and Tesla. These companies dominated markets in 2023, delivering returns of 107% to investors.2 The strong gains seen in the AI-theme should lead to increased business confidence, manufacturing activity and greater company investment. Analysts expect Nvidia, a chip designer whose products are extensively used in AI hardware, to post 67% revenue growth in 2024, after a 100%-plus gain in 2023.[2]

Bonds are generally viewed as relatively safe, but 2022 was the worst year on record for this asset class as the Fed’s aggressive rate hikes impacted on them negatively, with long-term bonds being the hardest hit. However, 2023 was a better year for bonds. They became more attractive as yields soared to 15-year highs prompting UK investors to return to UK government bonds as their risk/return profile became more attractive. This especially created an opportunity for investors looking for their cash savings to work harder for them.

There are other options for Business owners who could look at money market funds, for example, which will usually provide a higher yield than cash.


In 2024, we expect a more favourable environment as growth slows, inflation continues to decelerate and central banks start cutting interest rates. With the UK’s growth outlook looking weaker than its peers, exposure to the gilt market looks attractive.

Solid top-line sales growth and resilient corporate pricing power can keep profit margins elevated, which can in turn support company earnings and share prices. The backdrop for bonds is also positive, as central banks are expected to cut interest rates and that should lead to higher bond prices.

Ongoing wars in the Middle East and Ukraine are likely to have an impact on markets. With no end in sight to the conflicts, defence budgets globally are likely to increase, which usually bodes well for companies operating in the aerospace and defence sector. There’s still the potential for an economic downturn which, coupled with 40 national elections and more than half the world’s population going to the polls, could result in further uncertainty.

In summary, the inflation shock of 2022 did not morph into a growth shock in 2023, reducing hard landing fears. As interest rates start to come down this could release liquidity into the financial system: Goldman Sachs, an investment bank, estimates that investors poured US$1.4tn into US money market funds (i.e. quasi-cash instruments) and just US$95bn into US equities in 2023.[3] A potential release of this liquidity creates opportunities across equity markets, in UK internationals, gilts and gold in 2024, with the US dollar set to be the big loser.

Contact Matthew here. 


‘Issued by Evelyn Partners Investment Management Services Limited, authorised and regulated by the Financial Conduct Authority

The value of an investment may go down as well as up and you may get back less than you originally invested. Past performance is not a guide to future performance. This article is solely for information purposes and is not intended to be, and should not be construed as investment advice. It is based on our opinions which may change. If you are in doubt as to any course of action you should seek professional advice.

Neither MSCI nor any other party involved in or related to compiling, computing or creating the MSCI data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in or related to compiling, computing or creating the data have any liability for any  direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages. No further distribution or dissemination of the MSCI data is permitted without MSCI’s express written consent

[1] Bloomberg

[2] Bloomberg

[3] Goldman Sachs, US weekly kickstart, 15 December 2023


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