Global equity markets started the year positively. The MSCI All-Country World Equity index added over half a percent in January (in USD), closing in green territory for a third consecutive month. Markets were elevated by optimism that the Federal Reserve (Fed) would announce early rate cuts in the first quarter of the year, as inflation data improved. However, these hopes were crushed later by the central banks’ statements, cooling markets and erasing much of early January’s gains. Information technology and communication services were the best-performing sectors; materials and real estate lagged. While developed markets shares held well through the month, the emerging markets fell, aggravated by the appreciation of the US dollar. China led the sell-off, falling 10% in January – the country continues to be dragged down by deflation and problems in the real estate sector. Oil prices increased amid ongoing tensions in the Red Sea and disruptions to shipping. Global interest rates remained flat in January, as strong economic data cooled the enthusiasm for near-term rate cuts and raised hopes for a ‘soft landing’ of the economy. Yields rose across all major government bond markets (meaning that bond prices fell), reversing partially some of the positive performance achieved at the end of last year.
   In the US, equity indices reached record highs through January. The broad S&P500 index closed more than 1,6% higher for the month and is testing the limit of 5000 points. Optimism about the economy’s health and hopes of imminent rate cuts is what boosted shares, although such hopes were later dashed by the Fed. A robust jobs report revealed that 216k jobs were added to the economy in December; alongside with data for firm wage growth, and low unemployment (steady at 3,7%) was not enough to prevent the Fed from stating that “March rate cut seems unlikely”.  Some of the “Magnificent Seven” stocks continued to rally, leading to Telecommunication services and information technology to be the strongest sector performers in January. By contrast, real estate and materials were among the weakest sectors. At the end of the month the Fed had a rate-setting meeting and, as expected, interest rates were kept on hold (at 5,50%). As investors were scaling back expectations for rate cuts in 2024, fixed income returns suffered. Government bonds reversed some of last year's gains: the 10-year US Treasury’ yield rose to 3,95% (from 3,87%).
   Shares in Europe also delivered positive returns for the month – the broad pan-European index STOXX 600 added 1,4% in January, ending up higher for a third consecutive month.  The sector of Information technology was a clear leader, lifted by shares of some semiconductor equipment stocks. The communication services sector also performed strongly. Sectors that had rallied in late 2023 on hopes of upcoming rate cuts – including utilities and real estate – performed weaker. Expectations that interest rate cuts might come sooner from the European Central Bank (ECB) were shattered, when CPI inflation for December came out to increase to 2,9% (from 2,4% in November). So, as expected, ECB kept interest rates unchanged in January but reiterated that future decisions will be data-dependent, as the policymaker needs to be more confident that inflation is decreasing before reducing rates. Some economic indicators came out better than expected – the purchasing managers’ index (PMI) rose 0.3 pts to its highest level in the more than half a year, but its value remained at 47.9 in January (a reading below 50 indicates contraction). Overall, Eurozone’s GDP increased by 0.5% in 2023, a steep slowdown from the 3.4% recorded in 2022. Yields rose across all European government bonds markets, with the UK recording the largest move: the 10-year Gilt rose from 3.54% to 3.80%. The German 10-year Bund yield also moved higher to 2.16% (from 2.03%). 
   The first month of the new year turned out to be very positive for the Bulgarian stock exchange. All BSE indices were in the green: the flagship SOFIX rose by more than 2.8% for the month and the broad BGBX40 – by more than 2.7%. During the month started the trading of shares of the successful IPO of Bulmetal AD, which raised BGN 8 million at the end of last year. For the month, among Bulgarian companies, the best performer was again the technology company Shelly Group AD, whose price rose by almost 26%, and the worst - the financial and insurance holding Eurohold Bulgaria AD, whose share fell by just over 23%.