Newsletter Edition 1 – Market Update
Newsletter Edition 1, Spring 2024
Volatility returned to markets in mid-July after a smooth start, with significant spikes in equity volatility. The MSCI World excluding U.S. Index and S&P 500 Index had gained around 4% but later lost most of these gains. The MSCI Emerging Market Index also saw a dramatic turn around, from +4% to -0.8% for July. The volatility was driven by several factors, including an assassination attempt on Donald Trump, Joe Biden dropping out of the 2024 U.S. election, and underwhelming global economic data. Additionally, equity markets tend to exhibit higher volatility in August, September, and October, historically linked to U.S. election cycles. If markets do experience turbulence over the next few months, there is no need for concern as it could be just the regular seasonal factors playing out.
The IMF’s July update predicts global growth of 3.2% in 2024and 3.3% in 2025, suggesting a “no-landing” scenario, contradicting recession fears. However, inflation and fiscal spending remain key risks. In the U.S., fiscal deficits are rising, and bond vigilantes could push up yields, impacting financial stability. Global economic news shows mixed signals, with Australia holding rates steady, U.S. growth slowing, China’s factory activity contracting, and Europe facing policy uncertainty. Despite a narrative of a new commodities supercycle, concerns remain over China’s stimulus, declining oil demand, and competition between gold and Bitcoin.
Source: Banyantree Research – 29 July 2024
