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The equity market has been on a tear this year and what makes the gain all the more delectable is the fact that it has come on top of a very strong performance in 2023. Hopes of global central banks beginning to reverse rate hikes and resilient economic performance were among the key factors that helped sustain the upward momentum.
Here is a look at how returns from major asset classes stacked up in the first half of the year:
US Equities: The U.S. equity market got off to a solid start in 2024 and rallied through late March. After a brief consolidation, the overbought market reversed course, selling off until late late-April. The market began a renewed upward push thereafter and closed the half year with a healthy gain of 14.5%.
The index gained about 10% in the first quarter and a more modest 3.9% in the second quarter.
The market did face a threat to its upward momentum in the second quarter as inflation that was tracking a downward trajectory since peaking in June 2021 began to reverse course. This in turn reduced the odds of a rate cut materializing in 2024, jeopardizing the very premise behind the market rally.
Inflation has since then cooled off, allaying worries. The annual rate of the personal consumption expenditure index – considered the Federal Reserve’s favorite inflation gauge fell to a three-year low, data released last week showed.
Another important facilitating factor is the optimism behind artificial intelligence technology. Analysts are confident that this technology will rule the roost for years to come and strengthen the fundamentals of companies that have leverage to the technology. AI is also expected to help improve productivity and also slow down inflation.
See Also: How to Buy Stocks Like a Pro
Emerging Markets: Taking the iShares MSCI Emerging Markets ETF (NYSE:EEM) as the proxy, the performance of the emerging markets, diverged with the U.S. market at the start of the year. Subsequently, the emerging markets lock-stepped with the U.S. market before beginning to diverge yet again since the start of June.
Among the developing markets, the Indian benchmark is up 9.85% for the half-year, and China’s Shanghai Composite Index gained a more modest 0.70%, weighed down by growth concerns. Brazilian stock market gauge, IBOVESPA, is down 7.7% so far this year.
Gold: The yellow metal was on a tear for much of the first half of the year, capitalizing on expectations that the prospects of a Fed rate cut would weaken the dollar. A weaker dollar is positive for assets denominated in the currency such as gold.
Gold futures peaked at $2,464,50 on May 20 and have pulled back from the level since then.
Bitcoin: After outperforming most financial assets in 2023, Bitcoin (CRYPTO: BTC) went about a volatile ride so far this year. The apex crypto, which ran up ahead of the spot Bitcoin approval earlier this year, saw some moderation in buying interest immediately after the materialization of the catalyst.
The crypto picked up momentum shortly after and hit an all-time intraday peak of $74,415 on March 14. After pulling back from the high, Bitcoin reversed course and unsuccessfully attempted to break above the high in early June. Since then, it has retreated and it currently trades around the $63K mark.
The Returns: Taking the SPDR S&P 500 ETF Trust (NYSE:SPY) as a proxy for the U.S. equities, and EEM as a proxy for emerging market equities, here’s how returns compare:
| Returns from $1,000 Invested At End-2023 | Current value of investment | |
| SPY | +15.22% | $1,152.2 |
| EEM | +6.67% | $1,066.7 |
| Gold futures | +12.70% | $1,127 |
| Bitcoin | +48.30% | $1,483 |
The SPY settled Friday’s session at $544.22, down 0.39%, according to Benzinga Pro data.
Photo courtesy: Shutterstock
