Progress across asset markets disguised an eventful quarter where monetary policy moved from fighting inflation to supporting growth. August saw sharp falls in equity markets as weaker data in the US and a strengthening Yen saw popular trades unwound. Markets had largely recovered by month end. Bond yields declined pre-empting the first rate cut by the Federal Reserve which was delivered in September.
The US saw a change of Democratic candidate for the presidency reviving their chances in November’s election. The Ukraine conflict continued, although attention became more focused on the Middle East with Israeli action in Lebanon threatening to draw Iran into a broader conflict.
US markets again rose with broader indices ending the period near all-time highs while the tech heavy Nasdaq continued its recovery from August’s pullback. Employment data weakened but growth remains resilient. With inflation closer to target, the Federal Reserve cut interest rates by 0.5%. Markets remain hopeful a soft landing can be delivered in the US economy.
Emerging markets performed strongly. India showed good returns, but these were eclipsed by China where policy stimulus saw stocks rally strongly from lows in late September. Growth and valuation measures continue to improve relative to developed markets.
Japan’s Nikkei fell nearly 20% in early August but rallied to finish the period marginally lower. With Yen strength, this was positive for UK investors.
European economies were mixed but equities finished the period in positive territory, albeit lagging US and Asia. UK markets lagged, despite stronger economic performance versus peers, as hope for a pro-growth agenda post-election was tempered by negative rhetoric and concern over the Autumn budget.
Commodities saw weakness in industrial metals and oil reflecting global growth concerns. Gold continued its strong gains driven by central bank buying, falling rates, and geopolitical concerns.
With signs of regime change in markets, we remain watchful heading into the fourth quarter. The sharp recovery after August volatility again shows it is almost always better to remain fully invested through market stress. We continue to see increasing opportunities outside the US in select growing markets with cheaper valuations, including the UK.
Please note, our Market Overview & Outlook is our view of markets and does not constitute investment advice. Past performance is not necessarily an indication of future returns; the value of investments and any income from them is not guaranteed and can fall as well as rise. Overseas investments are affected by currency movements and exchange rates. If you would like investment advice on your individual circumstances, please do not hesitate to get in touch, telephone 01392 875500, info@SeabrookClark.co.uk.
Market Overview & Outlook Quarter 3 2024 (1 July – 30 September 2024) – Markets show resilience
Matthew Clark
Progress across asset markets disguised an eventful quarter where monetary policy moved from fighting inflation to supporting growth. August saw sharp falls in equity markets as weaker data in the US and a strengthening Yen saw popular trades unwound. Markets had largely recovered by month end. Bond yields declined pre-empting the first rate cut by the Federal Reserve which was delivered in September.
The US saw a change of Democratic candidate for the presidency reviving their chances in November’s election. The Ukraine conflict continued, although attention became more focused on the Middle East with Israeli action in Lebanon threatening to draw Iran into a broader conflict.
US markets again rose with broader indices ending the period near all-time highs while the tech heavy Nasdaq continued its recovery from August’s pullback. Employment data weakened but growth remains resilient. With inflation closer to target, the Federal Reserve cut interest rates by 0.5%. Markets remain hopeful a soft landing can be delivered in the US economy.
Emerging markets performed strongly. India showed good returns, but these were eclipsed by China where policy stimulus saw stocks rally strongly from lows in late September. Growth and valuation measures continue to improve relative to developed markets.
Japan’s Nikkei fell nearly 20% in early August but rallied to finish the period marginally lower. With Yen strength, this was positive for UK investors.
European economies were mixed but equities finished the period in positive territory, albeit lagging US and Asia. UK markets lagged, despite stronger economic performance versus peers, as hope for a pro-growth agenda post-election was tempered by negative rhetoric and concern over the Autumn budget.
Commodities saw weakness in industrial metals and oil reflecting global growth concerns. Gold continued its strong gains driven by central bank buying, falling rates, and geopolitical concerns.
With signs of regime change in markets, we remain watchful heading into the fourth quarter. The sharp recovery after August volatility again shows it is almost always better to remain fully invested through market stress. We continue to see increasing opportunities outside the US in select growing markets with cheaper valuations, including the UK.
Please note, our Market Overview & Outlook is our view of markets and does not constitute investment advice. Past performance is not necessarily an indication of future returns; the value of investments and any income from them is not guaranteed and can fall as well as rise. Overseas investments are affected by currency movements and exchange rates. If you would like investment advice on your individual circumstances, please do not hesitate to get in touch, telephone 01392 875500, info@SeabrookClark.co.uk.
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