After a strong first quarter, equity markets retreated in April, reacting to expectations of central bank rate cuts being pushed out on stronger economic data. The uptrend resumed through the quarter as softer US data alleviated concern inflation may remain above target or begin accelerating again.
US markets were again among the strongest, with leadership further concentrating in mega-cap growth stocks as the Artificial Intelligence theme continues to run. The technology heavy Nasdaq returned 7.9% with the S&P 500 returning 4.1% (in GBP). With expectations for rate cuts postponed again, interest rate sensitive areas of the market lagged.
Emerging markets performed well (MSCI EM up 4.9% in GBP), with Asia leading aided by a strong rally in China on moves to support the property market, though much of this gain was given up by quarter end.
Japan’s Nikkei rallied to end the period flat, but weakness in the Yen saw this translate into negative returns for UK investors.
Signs of tentative recovery in the UK and Europe continue. UK markets benefited from this (FTSE All Share up 3.7%), though European markets retrenched. Macron’s calling of a snap election of the French parliament in June, following a strong showing of “far right” parties in European elections, injected more uncertainty into the European political landscape.
Bond markets ended the period flat after yields rose before subsiding. The ECB cut rates as expected stressing further cuts remain data dependent. While consensus is interest rates have peaked in most countries, rate cuts have to date been implemented in smaller economies.
We anticipate trimming exposure to growth and technology stocks in portfolios after strong performance, reallocating this to areas of the market considered better value with a higher margin of safety should markets become volatile. This includes a moderate increase in UK exposure where the backdrop is improving, and the election of a new government may help the longstanding negative view of the UK by investors dissipate. Increasing political animosity in major European countries, and US elections in November, may see the UK become a haven of relative stability. We also see opportunities in emerging markets with attractive growth credentials and a more favourable currency outlook.
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 2 2024 (1 April – 30 June 2024) – More of the Same?
Hayden Williams
After a strong first quarter, equity markets retreated in April, reacting to expectations of central bank rate cuts being pushed out on stronger economic data. The uptrend resumed through the quarter as softer US data alleviated concern inflation may remain above target or begin accelerating again.
US markets were again among the strongest, with leadership further concentrating in mega-cap growth stocks as the Artificial Intelligence theme continues to run. The technology heavy Nasdaq returned 7.9% with the S&P 500 returning 4.1% (in GBP). With expectations for rate cuts postponed again, interest rate sensitive areas of the market lagged.
Emerging markets performed well (MSCI EM up 4.9% in GBP), with Asia leading aided by a strong rally in China on moves to support the property market, though much of this gain was given up by quarter end.
Japan’s Nikkei rallied to end the period flat, but weakness in the Yen saw this translate into negative returns for UK investors.
Signs of tentative recovery in the UK and Europe continue. UK markets benefited from this (FTSE All Share up 3.7%), though European markets retrenched. Macron’s calling of a snap election of the French parliament in June, following a strong showing of “far right” parties in European elections, injected more uncertainty into the European political landscape.
Bond markets ended the period flat after yields rose before subsiding. The ECB cut rates as expected stressing further cuts remain data dependent. While consensus is interest rates have peaked in most countries, rate cuts have to date been implemented in smaller economies.
We anticipate trimming exposure to growth and technology stocks in portfolios after strong performance, reallocating this to areas of the market considered better value with a higher margin of safety should markets become volatile. This includes a moderate increase in UK exposure where the backdrop is improving, and the election of a new government may help the longstanding negative view of the UK by investors dissipate. Increasing political animosity in major European countries, and US elections in November, may see the UK become a haven of relative stability. We also see opportunities in emerging markets with attractive growth credentials and a more favourable currency outlook.
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.
Found this useful?
Please feel free to share it with your contacts and friends through social media.