Webinar: Market update and economic outlook – January 2024
Watch the video to hear Kate Leppard, Head of Client Service, in conversation with Cazenove Capital’s investment team, or read the summary below.
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“In terms of elections, the US is the hardest one to call. Even if it is Trump vs. Biden, the impact on markets is far from clear. When Trump won in 2016, markets were initially downbeat. But they became much stronger after he introduced tax cuts for corporate America. So there may be market moves in response to policy announcements over the next few months but, at the moment, it’s very hard to predict.” – Caspar Rock, Chief Investment Officer
- We expect global economic growth of just over 2% for this year, which is meaningfully slower than last year when output probably expanded by around 2.7%.
- Markets seem to be taking a binary view, swinging from extreme optimism over a soft landing and interest rate cuts to more recent anxiety around recent persistent inflation and high interest rates.
- This year is one of elections, with around 50% of the world’s population going to the polls. Historically elections have an insignificant impact on markets, but there are exceptions – like the US – that could have an impact.
- We currently have a neutral stance on equities. Japan is our main overweight and highest conviction equity position. We have also been adding to our US equities.
- We are reducing our exposure to alternatives to take advantage of more attractive opportunities elsewhere, mainly by trimming absolute return funds and gold. Absolute return is seeing a more challenging environment. We still like gold, especially as a geopolitical hedge, but we are taking advantage of recent strength to reduce our exposure.
- Commodities are a small component of our portfolios. We like them as they act very differently compared to other asset classes. They can potentially help to protect against exogenous shocks such as conflict and unexpected weather patterns. For example, we are currently seeing a lack of water impacting the flow of goods through the Panama Canal – and too much water in the Rhine hurting trade in Europe.
- We are seeing attractive opportunities in the UK, with some assets currently looking very cheap, but the key is to be selective.
This article is issued by Cazenove Capital which is part of the Schroders Group and a trading name of Schroder & Co. Limited, 1 London Wall Place, London EC2Y 5AU. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.
Nothing in this document should be deemed to constitute the provision of financial, investment or other professional advice in any way. Past performance is not a guide to future performance. The value of an investment and the income from it may go down as well as up and investors may not get back the amount originally invested.
This document may include forward-looking statements that are based upon our current opinions, expectations and projections. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements.
All data contained within this document is sourced from Cazenove Capital unless otherwise stated.
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