Weekly Market Update

Key Insights from the H&B NSW 2024 Wealth Symposium

October 30, 2024

The H&B NSW 2024 Wealth Symposium last week provided a range of perspectives on the current market environment and outlook. While there was some disagreement between the "soft landing" and "weight of history" camps, several key themes and potential opportunities emerged:

The Case for Optimism

- Monetary conditions are loosening and there are signs of strong economic activity, especially in the U.S. This could support a new leg up in the bull market.

- Global trade remains healthy, particularly among emerging markets, despite concerns over tariffs and de-globalisation. Trade volumes are rising.

- Nominal corporate revenues are tracking headline CPI inflation. The "Magnificent 7" mega-cap tech stocks have driven the polarisation in earnings growth.

Reasons for Caution

- History suggests that corporate earnings typically decline at the end of a Fed tightening cycle, as rates fall in response to economic weakness. 1995 was an exception.

- Current valuations and earnings expectations imply a high probability of flat returns over the coming years if mean reversion occurs.

- Pockets of volatility, such as in homebuilder stocks, may be a canary in the coal mine foreshadowing broader market turbulence, similar to the lead-up to the Global Financial Crisis.

Potential Rotation and Opportunities

- Cyclical sectors, small-caps, non-U.S. stocks, and other out-of-favour areas are trading at extreme valuation discounts. A rotation into these could be sparked by a normalisation of real interest rates.

- Within asset classes and geographies, there may be divergences in risk and return. For example, Japan's Nikkei index is delivering higher returns than small-caps but with much greater volatility.

- Investors may need to look harder for quality companies with strong ROEs trading at reasonable valuations. These opportunities could be hidden in volatile and expensive indices.

- Active management and selectivity is important given the wide range of potential outcomes. Passive indexes could be more vulnerable.

U.S. Election Implications

- Markets may welcome the certainty of the election outcome, but a Republican sweep of Congress could boost sectors like financials, industrials and energy.

- However, the removal of political gridlock could also increase the potential for disruptive policies.

 

The H&B NSW 2024 Wealth Symposium highlighted both opportunities and challenges in today’s market. Some experts see strong economic activity and easing monetary conditions as signals of potential growth, while others point to historical trends, current valuations, and market volatility as reasons for caution. With the U.S. election on the horizon, possible policy changes could impact sectors and market dynamics, especially if political gridlock eases. In this environment, a balanced investment approach—mixing optimism with caution—may help investors find value and navigate a changing global landscape.

Fed Holds Steady as Global Markets Respond to Mixed Economic Cues

August 2, 2024
Read More

Positive Momentum Continues Amid Mixed Signals

August 2, 2024
Read More

ASX closes higher as cooling US inflation fuels anticipation of rate cuts

August 2, 2024
Read More

Nvidia Shines Amid Persistent Inflation Concerns in a Mixed Week for Global Markets.

August 2, 2024
Read More

May: A Month of Gains Tempered by Volatility

August 2, 2024
Read More

Fluctuating global markets and mixed economic signals in the last week of May

August 2, 2024
Read More

10-Year Series Part 2: QE Addiction and the Non-Bank Credit Boom

October 11, 2024
Read More

How Elections, Central Banks, and Geopolitical Tensions Moved Markets

October 11, 2024
Read More

10-Year Series Part 3: The Future Ain't What It Used To Be & Geopolitics

October 11, 2024
Read More

Strong U.S. Jobs Report and China's Disappointing Stimulus

October 11, 2024
Read More

Markets Brush Off Fed Rate Cut as the Outlook Remains Uncertain

September 30, 2024
Read More

Ten Economic and Market themes shaping the next decade with Hunt Economics

September 25, 2024
Read More

"What do I tell a client who wants to invest in Crypto?"

August 2, 2024
With 2021 bringing cryptocurrencies into the spotlight for both retail and institutional investors, is there a place for these currencies within client portfolio's?
Read More

The market has a "breadth" problem

August 2, 2024
Join InvestSense Director Jonathan Ramsay and Andrew Hunt of Hunt Economics as they discuss the markets ‘breadth’ problem and how strong liquidity should keep things afloat until February.
Read More

Finding value and maintaining confidence in a FOMO world

August 2, 2024
Join host Toby Potter of IMAP with Nick Kirrage of Schroders and Jonathan Ramsay of InvestSense as they discuss value as a style, and as a driver of conviction when investing.
Read More

Inflation in 2022 - Beware of cross currents in 2022

August 2, 2024
With inflation appearing to be on the way up again, what are some of the possible scenario’s for 2022? Where does inflation go from the zero bound we’ve reached?
Read More

What happened in markets in 2021, and why?

August 2, 2024
Join InvestSense Director, Jonathon Ramsey to reflect on the price action seen in markets in 2021 and what this might mean for 2022.
Read More

We've got a bad case of FOMO, but it's not what you think

August 2, 2024
With valuation still being the lightening rod for when markets react to external forces, the most expensive things tend to move the most. What does this mean for global asset allocators, and what is InvestSense’s position?
Read More

Helping your clients assess the climate impact of their Portfolio

August 2, 2024
Nathan Fradley explains how the ethosesg technology can help you assess and design an ethical portfolio that aligns to an investor’s personal values.
Read More

Carbon credits and investing – is it the outcome we expect?

August 2, 2024
ETFs that invest in carbon credits are now available. Why should we assume that their price will go up over time? And does buying a carbon credit ETF actually contribute positively to emissions reduction? Will it actually generate the outcome investors are expecting? This article explores the issues around investing in carbon credits.
Read More

Better World makes a difference with investment in renewables

August 2, 2024
There are many direct assets and funds that contribute positively to climate action within the InvestSense Better World Portfolios. Meridian Energy is one of the stand-out direct assets in the portfolio with a climate energy focus.
Read More

Bad news equals good news

August 2, 2024
In recent years professional investors have got increasingly used to the fact that good news is bad news for markets because higher interest rates are likely to be necessary, and of course vice-versa. However, last week the effect was stronger than ever and stocks rallied mid-week amidst reports of widespread lay-offs and expectations of a weak US jobs report.
Read More

‘Buy the dip’ opportunism start surfacing

August 2, 2024
The US market finally market caught a bid last week. Early in the week the market was down few percent after an earnings miss by ad dependent social media platform Snap (of Snapchat fame) combined with weak guidance raised more doubts about the economy and economic resilience of tech companies.
Read More

US momentarily dips into official bear market territory

August 2, 2024
The seventh negative week in a row for the US sent it briefly into official bear market territory before it recovered slightly late on Friday. The world’s largest stocks (Apple, Microsoft Amazon and Google) are all down 25%.
Read More

How Mark Lewin saved 13 hours a week with Managed Accounts

August 2, 2024
Mark Lewin was a financial planner, but is now the Director of Back Office Heros. In his planning business he gained significant efficiencies by recommending and implementing managed accounts for his clients. He tells us how...
Read More
Icon of a letter

InvestSense insights, delivered straight to your inbox.

Icon of a letter

Get the latest industry news

Icon of a letter

Get the latest industry news

Icon of a letter

Get the latest industry news