Spring Market Outlook 2024

Inflation has continued to fall since the start of the year. However, the decline has been patchy and this, combined with relatively strong economic growth in the US and strong wage growth on both sides of the Atlantic, has caused markets to reassess their expectations for interest rate cuts. Central banks are still widely expected to cut rates, but the timing of the first rate cut and the expected magnitude of the rate cuts have been revised down.

This caused bonds to give back some of gains from the final quarter of 2023, particularly as central banks have pushed back against expectations of early rate-cuts. High interest rates mean holdings in cash continue to produce the strongest returns seen in this asset class for some time. UK and emerging-market equities struggled initially as weak economic growth in both regions and concerns about China’s moribund property market and weak consumer confidence weighed on sentiment. However, Improving inflation in the UK and signs of economic growth in China have helped markets rise through March. In contrast, US, European and Japanese equities have continued to rise strongly. The US economy remains robust, helped by strong consumer spending, and high growth technology companies have mostly met ambitious forecasts for earnings growth. In Japan, modest wage growth has helped sustain the rally in equities as higher wages are likely to help sustain economic growth. European equities have also performed well despite weak economic growth.

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This post is the opinion of Velarium Wealth and contains a document produced by FE Investments that we feel is relevant at the current time. This document has been prepared for general information only and is not guaranteed to be complete or accurate. It does not contain all of the information which an investor may require in order to make an investment decision.