**Title: Share Markets Experience Year-End Wobble as Interest Rate Cuts Expected in 2024**
**Introduction**
As the year draws to a close, share markets are facing a period of volatility, while bond markets have completed a remarkable journey. The consensus view among investors is that many countries will be implementing interest rate cuts in 2024. Wall Street recently experienced its largest drop since September, with no clear catalyst for the decline. With the holiday season approaching and the release of final U.S. data, both Asia and Europe have shown little resistance. This article explores the recent market trends and provides insights into the factors driving these fluctuations.
**Share Market Decline and Bond Market Rally**
The STOXX 600 index in Europe fell by 0.4 percent, reflecting a broad market selloff. The car sector in the region experienced a 1 percent decline, while the tech and travel sectors slipped by 0.5 percent. However, Commerzbank offered some positive news as its shares surged by nearly 3 percent following approval from the European Central Bank for its stock buyback plan worth 600 million euros ($656.88 million). In the United States, futures were pointing towards a rebound after the previous day’s significant drop of 1.3 percent to 1.5 percent. Bond markets also continued to rally.
**Interest Rate Expectations and Bond Yields**
Investors have shifted their expectations towards interest rate cuts and a soft landing for the economy. Italy’s 10-year bond yields, which reflect Rome’s borrowing costs, reached their lowest level since August 2022. Similarly, benchmark 10-year Treasuries were down at 3.86 percent, almost unchanged from the beginning of the year. This shift in expectations highlights the market’s anticipation of lower bond yields and future rate cuts.
**Currency Markets and Economic Indicators**
In the currency markets, the yen strengthened against the dollar after Japan raised its growth projections for the fiscal year to 1.6 percent. The dollar index, which tracks the U.S. currency against other major currencies, remained relatively stable. The British pound steadied after weaker-than-expected UK inflation numbers caused a significant drop on the previous day. The euro also experienced little movement as the debate continues regarding when the European Central Bank (ECB) might start cutting interest rates.
**Turkey’s Interest Rate Hike and Commodity Markets**
Turkey’s central bank is expected to raise interest rates by another 250 basis points, bringing them to 42.5 percent. This move reflects the country’s commitment to combatting inflation problems through tried and tested methods. In the commodity markets, global oil benchmark Brent hovered around $80 a barrel due to concerns over global trade disruptions and geopolitical tensions in the Middle East. Gold, which has seen a 12 percent increase this year, remained slightly higher at $2036.19 per ounce.
**Conclusion**
As the year comes to an end, share markets are experiencing a period of volatility, while bond markets have rallied. The consensus view among investors is that interest rate cuts will be implemented in various countries in 2024. This shift in expectations has led to lower bond yields and a soft landing being priced into the market. Currency markets have shown mixed movements, with the yen strengthening against the dollar and the pound stabilizing after a significant drop. The upcoming release of U.S. data and Turkey’s interest rate hike will likely impact market trends in the coming days. Additionally, global trade disruptions and geopolitical tensions continue to influence commodity markets.
