Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
January market performance: The waiting game is on
Market Rewind
Søren Otto Simonsen
Senior Investment Editor
Summary: Market performance in January indicates that while some are increasing the hopes of a soft landing, markets are waiting to see what will play out. Will the recession come? Will any geopolitical tension break? Will we see rate cuts? How will US fiscal spending pan out? Will inflation come back? These are some of the questions that could tell the market whether it's up or down from here. But until there's a clearer direction - we wait.
On the broadest scale, global equities, markets seem to have been relatively muted in January with a positive performance of just above 1%. This supports the overall narrative that more or less intact growth seems , despite a variety of uncertainties and worries both on a macro level and on a smaller scale and the hopes of a soft landing, i.e. that we avoid a hard recession,are increasing. Worries about geopolitical tensions, an inflationary comeback and US fiscal spending are among the risks that hold markets in check.
At the regional level it becomes there’s a divide in performance. The US and Europe post returns of 1.6 and 1.5% respectively for the month. The Asian region and emerging markets (EM) were both down. Asia with –1.7%, whereas the EM index fell by 4.7%. While there’s a big difference between those numbers, one of the reasons behind the falls are the same, as China are pulling down both. The reason for the difference is that a large proponent of the Asian index is Japanese stocks, which had a good month, but Japan isn’t part of the EM index, of which China makes up a relatively larger part.
The Chinese economy is faced with a wide variety of challenges, which have sent the Chinese stock market down.
Communication services was the best performing sector during an earnings-heavy January. Within this sector it may be worth highlighting a company like Netflix, which presented positive earnings late in the month. Also, the second-best performing sector, information technology, seemed to be positively affected by earnings, as companies like Microsoft posted good results.
Materials and utilities are at the bottom of the chart falling 4.7 and 3.4% respectively. While there would be several reasons for this, two could be an expression of some worry about the stability of the economy despite the positive results in other sectors, as well as bond rates remaining somewhat attractive relative to especially utilities, which by some may invested in for dividends.
Global bonds had a relatively quiet month ending up in a small minus. The asset class may come into focus later, as the big central banks incrementally move closer towards pushing the rate-cut button.
Check out the rest of this month’s performance figures here:
Sources: Bloomberg and Saxo
*Please note that the sector graph omits the Real Estate sector this time around. This is because Bloomberg hasn’t posted prices for MSCI World Real Estate (MXWO0RE), which has been used as the proxy for that sector, since October 31st.
Global equities are measured using the MSCI World Index. Equity regions are measured using the S&P 500 (US) and the MSCI indices Europe, AC Asia Pacific, and EM respectively. Equity sectors are measured using the MSCI World/Sector] indices, e.g., MSCI World/Energy. Bonds are measured using the USD hedged Bloomberg Aggregate Total Return indices for total, sovereign, and corporate respectively. Global Commodities are measured using the Bloomberg Commodity Index. Oil is measured using the next consecutive month’s WTI Crude oil futures contract (Generic 1st CL Future). Gold is measured using the gold spot dollar price per ounce. The US Dollar currency spot is measured using the Dollar Index Spot, measuring it against a weighted basket of the following currencies: EUR, JPY, GBP, CAD, SEK, and CHF. Unless otherwise specified, figures are in local currencies.
Latest Market Insights
Quarterly Outlook
-
-
Quarterly Outlook
Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges
Althea Spinozzi
Head of Fixed Income Strategy
-
Quarterly Outlook
Equity Outlook: Will lower rates lift all boats in equities?
Peter Garnry
Chief Investment Strategist
After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto... -
Quarterly Outlook
FX Outlook: USD in limbo amid political and policy jitters
Charu Chanana
Chief Investment Strategist
As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ... -
Quarterly Outlook
Commodity Outlook: Gold and silver continue to shine bright
Ole Hansen
Head of Commodity Strategy
-
Quarterly Outlook
FX: Risk-on currencies to surge against havens
Charu Chanana
Chief Investment Strategist
Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo... -
Quarterly Outlook
Equities: Are we blowing bubbles again
Peter Garnry
Chief Investment Strategist
Explore key trends and opportunities in European equities and electrification theme as market dynami... -
Quarterly Outlook
Macro: Sandcastle economics
Peter Garnry
Chief Investment Strategist
Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p... -
Quarterly Outlook
Bonds: What to do until inflation stabilises
Althea Spinozzi
Head of Fixed Income Strategy
Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ... -
Quarterly Outlook
Commodities: Energy and grains in focus as metals pause
Ole Hansen
Head of Commodity Strategy
Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer