Q4 Market Commentary 2024

Q4 Market Commentary 2024

Over the fourth quarter, markets were mixed as Donald Trump’s Republican party won the election and control of both houses in the US. In other markets, nervousness and speculation around Trump’s trade tariffs dented confidence. Over the period the European Central Bank cut rates by a further 50bps, the US Federal Reserve cut by 25bps, and the Bank of England remained on hold as some areas of inflation continued to be higher than the Bank would like.

The domestic market

The UK market fell over the quarter as measured by the MCSI UK IMI index and was down 2.13% as concerns around the budget, and the impact of this affected domestically focused sectors in particular.  Inflation continues to be closer to target with the slight exception of services inflation. Corporate earnings overall remain resilient, mergers and acquisitions have picked up this year from a variety of sources proving value within the UK market and flows from overseas have started to return.  The consumer remains in a reasonably resilient place and, should inflation and rates be cut further, this should be helpful.

What about the USA?

In the US, equity markets were strong on a hope that some of the pledges made by Donald Trump could provide a boost to US businesses moving into 2025. We will await details on the proposals as we enter the new year and will continue to engage with our active managers on how companies are adjusting should plans come into practice. Corporates continue to surprise on the upside to earnings growth and forward expectations remain higher. The market returns continue to broaden out, but we remain conscious of some of the risks within the economy and are aware of some of the market concentration and valuations.

What’s happening in China?

Throughout the quarter we continued to see monetary and fiscal stimulus in China as it looks to boost the domestic economy. At the same time, potential trade tariffs from the US and by the European markets impacted the Chinese stock markets. Whilst GDP growth still looks strong on a relative basis, the Chinese government have decided to increase the stimulus which should provide a boost to the markets, and there is more expected, but these measures take a while to filter into the real economy.

ASAM’s Outlook

We continue to look at the investment outlook for the long-term. Our focus remains on fundamental analysis to identify opportunities that have the ability within their business models to adapt to the market conditions. We look to create opportunities that blend asset type and regions that will be robust to current conditions and unforeseen change. Over the last 12 months there have been lots of indiscriminate moves in markets, sectors, and individual companies. Many market changes are reactionary and occur without long term consideration of how individual companies are performing and adapting to the economic environment. It is worth remembering that some of the most successful businesses globally took decades to become the household names they are today.

 

This information is obtained from sources considered reliable, but its accuracy and completeness is not guaranteed by Anderson Strathern Asset Management Limited. Neither the information nor any opinions expressed constitute financial advice. Investments can fluctuate in price, value and/or income and may return less than the original amount invested. Past performance is not necessarily a guide to future performance. Anderson Strathern Asset Management Limited is authorised and regulated by the Financial Conduct Authority.

We’re here to help

Fill in the form at the top of the page and a member of our expert team will get back to you. Alternatively, contact us on 0131 270 7700.