Top 3 best-performing assets year-to-date

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Written on Oct 5, 2023

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US and European equities made it to the top three best-performing assets
Brent crude oil outperformed most other assets in the first 3 quarters
Q3 was challenging for stocks

The last quarter of the trading year started, and financial markets are stretched. Rising yields and a strong dollar led to an increased correlation between financial assets.

Also, market moves have been extreme, especially in Q3 2023. For example, EUR/USD, the most popular currency pair, closed the 11th consecutive weekly negative candlestick last week. It tells much about the dollar’s strength and the market’s sensitivity.

Naturally, stocks underperformed. In an environment where yields offer high returns, one may have thought that many investors left the stock market. So far, that is not the case.

It could be in Q4 because the 2-year yield is now above 5%, much higher than the S&P 500 dividend yield of around 1.6% – the biggest difference in the last two decades.

But before looking at what the future might bring, let’s have a look at what the past three quarters meant for market participants. So here are the top 3 best-performing assets YTD (i.e., end of Q3):

US equities
Brent crude
European equities

US equities

The S&P 500 index is viewed as the benchmark for the overall US equity market. It gained +11.50% YTD and gave up some of its gains in September.

September was a tough month for stocks because the Federal Reserve of the United States signalled that rates would likely stay higher for longer. Moreover, the labour market remains very tight, supporting the case that the Fed is in no hurry to cut rates.

Brent crude oil

Brent crude oil is in second place with a little over 10% gain. The oil market was very resilient, and the WTI crude oil price rally towards the $100 level surprised many.

Sure enough, the new quarter started, and oil prices had a big selloff. However, it doesn’t erase the fact that Brent crude oil was the second-best-performing asset in the year’s first three quarters.

European equities

European equities are in a surprising third place. Investors poured funds into European stocks despite the challenges posed by Russia’s invasion of Ukraine and the sanctions that followed.