2nd Quarter 2024 Market Update

I hope this update finds you well as we approach the end of summer, although it seems the summer weather has eluded us this year.

For this update, I wanted to try something a bit different by referring to an old update from February 2023.

In that update, I used an Artificial Intelligence (AI) language model, ChatGPT, to create a short piece that ticked most of the boxes. Unfortunately, the data was slightly off, and the output wasn’t quite there.

Fast forward to last week, and with advancements in AI, we are now able to provide a more accurate update with some data input. At the end of this update, you’ll find a full summary of the quarter.

Before you scroll down to read that, I have a few additional comments:

Markets were more normal in Q2, with the prospect of central banks cutting rates sooner rather than later. The inflationary pressure we’ve been experiencing has started to ease, resulting in reduced savings and mortgage rates.

Energy costs have remained stable, but there is an expectation that they may rise again towards the end of the year. While this increase will have less impact than previous spikes, it will still drive costs up.

We’ve seen positive performance across the board, with little of note on the negative side, though there is some pressure on fixed income.

As this update only covers Q2, the election called in May for July will be discussed in the next update.

There are no other major issues to report, which is a relief, and I look forward to rate cuts in due course.

As always, please feel free to get in touch if you require any further assistance or have any concerns.

Below is the AI-generated update, which I have not altered in any way. However, the data contained within is correct. I’m sure you’ll agree it’s an easy read and might even put me out of a job!

Q2 2024 Market Recap

Global markets saw a small bump of 0.7% in the second quarter of 2024. China led the way with a solid 7.1% gain, which gave a nice boost to Asian and emerging markets, helping them outperform the more developed ones. Despite the European Central Bank (ECB) cutting interest rates in June—something no other major central bank has done yet—European equities stayed flat over the quarter. UK gilts took another hit, US Treasuries barely moved, and sterling corporate bonds dipped a bit.

United States

Even though inflation kept pushing back the expected timing for the first US interest rate cut, US stocks still managed a 4% gain this quarter. The ongoing buzz around AI-related companies really paid off, with tech and communication services stocks leading the charge. These sectors benefited from strong earnings and more upbeat corporate messaging. On the flip side, materials and industrials didn’t fare as well.

Europe

Europe had a bit of a rollercoaster quarter. It was the top-performing region in May, thanks to investors betting on an interest rate cut in June, but losses in April and June left European stocks with just a 0.1% gain overall. The June performance was hit by snap elections in France and fading hopes for more rate cuts. Tech stocks did well across the board, but Europe’s big-name automakers and luxury brands struggled.

United Kingdom

UK stocks delivered a 3.5% gain, bringing the year’s total so far to 7.3%—pretty much in line with how European and Japanese stocks have done. The good news on inflation, with the CPI dropping back to the 2% target in May, gave Prime Minister Rishi Sunak enough confidence to call a general election in July. However, the Bank of England didn’t see this as a strong enough reason to cut interest rates in June.

Emerging Markets

Emerging markets posted a healthy 5.1% gain, mainly driven by a strong rebound in China, thanks to some government support for its struggling housing sector. Turkey came out on top, followed closely by Taiwan, which benefited from its many tech giants. South Africa also did well after its general elections, as did India. On the downside, Brazil and Mexico had the biggest losses, along with Korea and other energy-focused emerging markets, which were hit by falling oil prices.

Fixed Income

UK gilts didn’t have a great quarter, falling by 1.1%. US Treasuries were mostly flat, with a less aggressive stance from Fed Chairman Jerome Powell in June helping to balance out earlier losses. The latest Fed outlook now only expects one more rate cut this year, down from the three that were expected in March. Meanwhile, sterling corporate bonds slipped by 0.2%.