Global stock exchanges enjoyed strong gains in the third quarter. Markets advanced in July on good economic news out of the US. And data from the Eurozone showed the long recession came to an end in the second quarter (although some countries within the region remained in recession). But economic news for the quarter overall remained rather lumpy with US data in September suggesting that growth might be softening. Market moves were also affected by political developments over much of the period. This was especially true in August, as tensions rapidly mounted between the US and Syria over reports that President Assad had employed chemical weapons against his own people. However, stock markets reacted very well to an apparent last minute diplomatic solution to the standoff. Meanwhile, markets were pleasantly surprised when the US Federal Reserve (the Fed) decided to maintain the existing level of quantitative easing, after earlier remarks from Fed officials about tapering led investors to expect the US central bank to soon begin cutting back on bond purchases. This gave a big boost to both equity and bond markets in September. However, the increasing likelihood of a government shutdown in the US, as Republicans and Democrats seemed unable to reach a compromise on a funding measure to keep the government running, prompted jitters in the markets as the quarter drew to a close. This was coupled with worries in Europe that the Italian coalition government would crumble before being able to contend with much-needed debt reforms, which pared strong market gains for the quarter, though these still remained substantial for most markets.

Global equities continued to advance in the first half of the second quarter, with US stocks hitting all-time highs, while Japanese equities continued to rally. However, from the latter part of May onwards both equity and bond markets suffered setbacks, as investors became nervous about remarks from US Federal Reserve officials hinting at a "tapering" in the US central bank's quantitative easing programme at some point. Meanwhile Japanese equities succumbed to a big correction beginning in the second half of May, amid growing worries that the new Abe government would not sufficiently deliver on the package of fiscal and monetary policy changes that had been expected following its election win.

Emerging stock markets underperformed in the face of growing worries that China's government would not do enough to address concerns about sub-par economic growth. Chinese growth figures released in April (an annualised 7.7%) disappointed. Commodity markets also languished during the quarter. April saw a precipitous fall in gold prices. Lower inflation expectations were a factor in the softness of commodity markets. Nevertheless, a fall in oil prices was good news for the economic outlook. Although markets remained unsettled during much of June, economic data showed improvement in a number of areas, notably in the US (a factor behind the talk of tapering QE).

Though Europe's economy remained weak, there were some glimmers of improvement even there. Mervyn King, in his final inflation report before leaving as the governor of the Bank of England, suggested the UK economy had turned a corner. Despite market concerns over government policies, there was good news for Japan's economy with first quarter GDP of 3.5% proving much stronger than expected. House prices strengthened in the US, while consumer sentiment and employment data continued to improve. Nevertheless, investors remained pre-occupied with what the central bank would do, as shown by the market's strong reaction to comments on the likelihood of reducing bond purchases by Federal Reserve chairman Ben Bernanke.

Global stock markets continued to rally in the first quarter of 2013. As a result, at the end of March in the US, the S&P 500 pushed past its previous all-time high reached in October 2007 just before the financial meltdown. The US and Japan were among the outperforming exchanges, with New York benefiting from signs that the economic recovery was becoming solidly established, despite earlier concerns over the impact of government sequestration on the recovery. Meanwhile Tokyo rallied on further yen weakness and government steps to ease monetary policy and employ quantitative easing. The Tokyo market hit a 52-month high in February as a retaliation mooted during the G20 summit on current policy failed to materialise.

Meanwhile, despite most markets rising over the quarter, Europe and emerging markets lagged the US. Brazil was 7% lower YTD in US dollar terms and the broader MSCI Emerging Markets Index was down 1.6% in dollar terms in the first quarter. European markets faced the headwinds of continued economic weakness and renewed worries over the future of the single currency when the EU was confronted with another bank bailout crisis, this time in Cyprus. The island state was forced to shut all of its banks for several days and impose capital controls to prevent a flight of capital from the country. In emerging markets investors were troubled by signs of less vigorous than expected growth in China and a deterioration in economic conditions in India.

Despite the continuous rise in markets, this was not accompanied by heavy volumes. For example, the average number of S&P 500 shares traded per day was just 536 million in March. In contrast, the average daily number in March 2006 was 1 522 million.