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Written by: George Prior
A Santa Rally could supercharge markets to the end of the year, predicts the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organisations.
This bullish prediction from deVere Group’s Nigel Green comes after an impressive November – which had previously been forecast by the CEO in October.
On Wall Street, the S&P 500 gained 8.9% last month, which is the second-best November since 1980.
Meanwhile, in London, the FTSE had its best month in 2023.
MSCI’s world stock index closed the month up almost 9%, its best performance since November 2020.
In October, Nigel Green confidently predicted that “we’re about to see a year-end rally, which investors would not want to miss out on.”
Now in December, he says: “After November’s impressive run, we now expect the momentum to continue. It’s likely we’ll see markets experience a Santa Rally taking us to the end of 2023.
“We would attribute a surge in stocks due to a plummet in bond yields that’s been triggered by increasing signals that central banks, including the Federal Reserve, the Bank of England and the European Central Bank, among others, are done for now with their rate hiking agendas.”
The deVere CEO continues: “With a possibility of a Santa Rally, the focus shifts towards sectors poised for growth in the wake of improved market sentiment.
“Tech, renewable energy, and healthcare are sectors that could benefit from the expected surge, providing investors with opportunities for capital appreciation.
“Diversification remains a cornerstone of effective portfolio management, and in the face of changing market conditions, it takes on renewed importance.”
Investors should also remain diversified across asset classes, geographies, and industries to mitigate risk and capture potential upside.
Santa Rallies, a phenomenon observed during the holiday season, have intrigued and captivated investors for decades.
Historically, these year-end surges often reflect an optimistic and festive market sentiment.
Notable examples include the December rally in 1991, where positive developments in the Gulf War and easing tensions contributed to a market upswing.
Similarly, in 2018, despite a challenging year, markets experienced a late-year surge attributed to positive trade developments between the US and China.
Nigel Green concludes: “The signals are for a Santa Rally as we expect the markets to have steadily more momentum to the end of 2023.”
Related: Global Bonds Rally: Investors Urged To Review Portfolios