Welcome to our Summer 2024 Investment Review from FPC’s Mike Lea, Head of Investments and Senior Adviser…
The Q2 market period to the end of June continued to show positive sentiment overall, but that progress has since been overshadowed by a sudden return of market volatility.
Stock markets were led higher by the Asia Pacific ex Japan region rising +6.2%, closely followed by Emerging Markets +4.9% and the US +4.1%. Defensive fixed interest assets remained flat, with the market having already re-priced to account for expected lower interest rates. The fixed interest market will continue to reward investors primarily by way of income from now on, unless an economic slowdown forces interest rates lower than currently forecast. Gold continues to ‘find a bid’ as an alternative defensive asset, notwithstanding there is no cash-flow generated from the asset class.
It is an old story now in some ways that the US technology sector, and specifically the Artificial Intelligence (AI) arms race, has been the only game in town recently for amassing capital gains. We, like many others, question at what point company valuations in this space become detached from the reality of future profits. Given the increased volatility, investors may have decided that has already happened, though the low trading volumes of the summer months do not make it easy to identify a change in trend and, in the long-term, betting against a dynamic economy like the US is a bold move.
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Please note, this investment commentary contains information and opinion, on current economic and political positions, and does not constitute advice. The information is provided in good faith and is believed to be accurate, but as some data is provided by third parties this cannot be guaranteed. Past returns should not be seen as predictors of future returns.
