Webinar: Market update and economic outlook – April 2024

“When it comes to the US election, don’t look at the popular share votes of Trump v Biden. They grab headlines, but you have to concentrate on the seven swing states that will determine the outcome of the election.”

• Equities have had a historically strong start to 2024, with most regions becoming slightly more expensive over the last quarter. However, there are some pockets of value including the “unloved” UK and parts of Asia.
• US equities look historically expensive, as has been the case for much of the last five years. Despite this US earnings are consistently beating expectations, partly due to consumer strength and real wage growth.
• While many countries are grappling to bring inflation down, Japan is an outlier. Due to years of deflation, a degree of inflation is expected to be positive for its overall economic picture.
• At a high level, bonds are looking attractive relative to the last 10 years. However, it’s important to be selective. For example, credit valuations are looking expensive.
• We still really like commodities, particularly gold for its hedging properties. We are seeing this more structural demand for gold in terms of performance, particularly from the Middle East, Asia and central banks.
• We might see a divergence in the actions of central banks, for example, the UK might cut interest rates while the US Federal Reserve keeps them higher for longer. This is an important consideration for bond allocation.
• Many S&P companies are now announcing earnings. With some of them being as large as Meta and Nvidia, this is almost as impactful as GDP numbers being released. We believe the short-term volatility this creates might be here to stay.
• Small caps lag large caps in most regions quite significantly. Sentiment really is quite poor, but there is an opportunity to catch up. It’s an area that looks interesting and unloved.

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