Market Updates

Equity indices from the US to Japan and through Europe continue to make record highs week after week. Last week was no different, although some indices closed flat such as the US S&P 500. There’s a structural element to this rally, which we carry in our portfolios.

It wasn’t obvious from the solid figures on job growth, but we’ve got more signs that the US labour market is indeed cooling. The unemployment rate rose to 3.9%, the highest reading since January 2022, while wage growth, job openings, and job quits slowed. This combination of data supported markets.

There were no big surprises from last week’s US inflation reading (the personal consumption expenditures index), which rose 0.3% from December to January or 2.4% year-on-year. This has left markets largely unperturbed as strong earnings and economic growth continue to drive sentiment upward. The S&P 500 and Nasdaq equity indices closed at record highs again, while US Treasury yields remained flat.

Despite some apprehension from markets early last week (Nvidia stock price fell by 10% before results were announced), Nvidia’s quarterly earnings did beat expectations once again.

Last week, US inflation slowed less than expected. This caused equity and bond prices to fall and the US dollar to rise as markets quickly reevaluated their expectations of rate cuts from the US Federal Reserve (Fed).

The US Federal Reserve (Fed), Bank of England (BoE) and Sweden’s Riksbank all kept interest rates unchanged at their meetings last week.

US equities continued to rise to make new record highs last week. US Treasury Secretary, Janet Yellen, said that inflation is now under control.

US equities rose back to their historical highs last week, driven mainly by AI optimism as chipmakers from the US to Taiwan posted strong gains.

The second week of 2024 saw rising equity prices after starting the year with a sharp pullback. Sector-wise, the main US technology segments rose the most, energy lagged.

Markets cheered as central banks held rates at the end of 2023 and priced in more rate cuts for this year. These dynamics bolstered equity markets, which continued to rally towards year-end.

This note summarises our 2024 Investment Outlook, from the key forecasts and expectations underpinning our investment strategy to what they mean for asset allocation and how we invest in flagship portfolios.

Last Thursday’s US Thanksgiving holiday meant market moves were more muted than in recent weeks, but still in line with November’s positive trend. Equities continued their strong run, particularly in the US, which recorded gains for the fourth week in a row.