13 D E C E M B E R 2 0 2 3 • I S S U E 4

Market Mood

Since September, oil prices have experienced a substantial decline, reversing all the gains made since June. Oil futures, which were trading above $90 per barrel in late September, have now dipped below $70 per barrel. This significant drop in oil prices has not only contributed to a decrease in global headline inflation over the past three months but has also facilitated a decline in government bond yields from the peaks observed in October. The simultaneous decrease in both oil prices and bond yields has been instrumental in propelling equity markets higher. As bond yields fall, equities become more attractive to investors. Furthermore, the decline in oil prices has positively impacted corporate profits. Despite these market shifts, we maintain the perspective that oil continues to serve a valuable role in portfolio diversification, given that its price dynamics do not strictly align with those of equities.

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