As we approach the 2023/2024 tax year end, our Adviser Eamonn Lynch looks back at the performance of the markets at the end of 2023 and outlines what we can expect throughout 2024. Will the positive signals regarding falling inflation result in interest rate cuts from the Central Banks?

Strong Quarter: Q4 2023 witnessed robust performance in global shares. The US Federal Reserve’s signal of potential interest rate cuts for 2024 buoyed both shares and bonds. This accompanied positive data showing inflation falling faster than expected.

This has led markets around the world have been approaching all time highs.

Global equities were boosted by the strengthening of the ‘soft landing’ narrative – where inflation falls back to target without a significant slowing of the economy. US and European equities performed well but the UK lagged as weaker energy prices and a strong pound acted as headwinds for the FTSE.

Interest Rates & Inflation: The expectation of lower interest rates in 2024 lowered bond yields which helped generate a broad rally for bonds (bond prices increase as yields fall). Gilts, which had been performing poorly earlier in the year, were one of the strongest performing asset classes over the quarter.

The expectation is for rate cuts in 2024, probably starting in the USA, with Europe and the UK to follow thereafter, given their respective inflation journeys.

Cash Returns: Savings rates have been falling especially on terms longer than 12 months, but money-market funds remained stable at around 5.25% p.a. following the Bank of England’s decision to hold rates. Cash has therefore lagged behind most other asset classes.


  1. Inflation and interest rates remaining top of investors’ agendas, but growth prospects will also come into focus.
  2. The expected fall in cash rates will likely reduce the attractiveness of money-market funds.
  3. Elections having the potential to increase short-term volatility