Financial markets continue to surprise as the first half of 2023 ended, with AI, crypto and commodity markets, and a calamitous banking crash making headlines.
What underpins all of these has been the unflagging interest rate hikes which have plagued markets since 2022, but there is the optimistic belief that the cycle will end soon. The resultant $6 trillion (or 12%) world stock value upswing has benefitted mainly top companies.
ChatGPT, now synonymous with AI, has been largely responsible for tech giants seeing a combined hike of 70 %. Apple, Microsoft, Alphabet, Netflix, and Amazon have posted 30-50 % gains. Nvidia briefly joined the $1 trillion club while Meta and Tesla have both doubled in valuation.
Anticipating its best year in a decade, Japan’s Nikkei share average is up 16% in dollar terms, while gold too has risen 5%.
Financially ravaged countries have performed well too, with government bonds in El Salvador, Sri Lanka, Ukraine, Pakistan, and Argentina making remarkable returns; while the Turkish lira, Egyptian pound and Nigerian naira have all lost value.
Considered the worst crash since Lehman brothers, the collapse of Silicon Valley Bank triggered the bailout of stalwart Credit Suisse by UBS.
Cryptomarkets have been characteristically volatile, with bitcoin surging ahead and Binance and Coinbase embroiled in regulatory proceedings.
Lower global inflation hopes have been stoked by drops in natural gas, oil and foodgrain prices in Europe.
The global rate hike cycle is seen by some as a policy mistake that could push markets too far and catalyse a recession in 2024.
