By: Graham Wainer
The first quarter of 2024 concludes with the global economy on a solid footing. Since the middle of 2022 we have argued that an economic ‘soft landing’ is most likely, and consider the current environment to align with that definition. Whilst the US remains a notable outperformer, the global economy is experiencing falling inflation, driven by rebalancing labour markets, and broader growth.
Capital markets have embraced this environment, with multiple equity indices climbing to record highs, credit spreads tightening and bond yields remaining well below last year’s recent peak. Global markets are up 7.8%* so far this year - the strongest first quarter of the year since 2019. Mega-cap technology stocks continue to lead equity markets, driving US strength. However, participation has spread beyond AI-related excitement, with new highs registered in sectors such as financials, industrials and healthcare,
as well as France, India and Japan.
In this quarter’s Investment Outlook, we outline the broadening in economic momentum and possible next phase of the cycle in section one. In section two, we consider the market implications of the upcoming US presidential election, with particular reference to a possible second term for Donald Trump. Additionally, we summarise research that analyses whether increased market concentration presents a threat to the health of the longer-term market cycle, and how we emphasise smaller companies as a way to diversify and capture lesser-known investment opportunities.
*Source: Bloomberg, USD, March 2024.
Find out more about Stonehage Fleming's Investment Management offering
Disclaimer: This document has been prepared for information only and is not intended for onward distribution. It is neither an offer to sell, nor a solicitation to buy, any investments or services. The information on this document does not constitute legal, tax, or investment advice. It does not constitute a personal recommendation and does not take into account the individual financial circumstances, needs or objectives of the recipients. You must not, therefore, rely on the content of this document when making any investment decisions.
Any information which could be construed as investment research has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Further it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Past performance is not a guide to future returns. If the information is not displayed in your base currency, then the return may increase or decrease due to currency fluctuations.
All investments risk the loss of capital.
The value of investments may go down as well as up, and for products designed to return income, the distributions can also go down or up and you may not receive back the full value of your initial investment.
Changes in the rates of exchange between currencies may cause the value of investments to go up or down in the reporting currency.
Persons in possession of this document should observe any applicable legal requirement in relation to the possession of this Information in that jurisdiction. Any overseas recipient should consult its professional advisers as to whether it requires any governmental or other consents, or if it needs to observe any formalities to enable it to receive or respond to this communication.
Whilst every effort is made to ensure that the information provided to clients is accurate and up to date, some of the information may be rendered inaccurate by changes in applicable laws and regulations.
Issued by Stonehage Fleming Investment Management Limited (SFIM). Authorised and regulated by the Financial Conduct Authority (194382) and registered with the Financial Sector Conduct Authority (South Africa) as a Financial Services Provider (FSP No. 46194).