Commentary
Last week, US growth stocks delivered positive performance, while all other major global equity indices declined. In the US, the large-cap growth category was the major driver of gains, while remaining categories mostly declined. Gains in S&P 500 were predominantly concentrated in Technology sector, with all remaining sectors declining during the week (except Real Estate). This dynamic was largely underlined by the Fed’s policy meeting, where the interest rate was kept unchanged and the number of expected 25bps cuts in 2024 were reduced from three to one. As compared to the Fed, markets are pricing in two 25 bps cuts by year-end.
Out of last week’s 10 most traded stocks, analysts expect the best performance in the next twelve months from Alibaba (BABA), Carnival (CCL), Amazon.com (AMZN), AMD (AMD), and Shopify (SHOP). Meanwhile, NVIDIA (NVDA) and Apple (AAPL) are currently considered slightly overvalued.
In fixed income markets, yields declined in response to a lower-than-expected inflation and activity data in the US. Despite the Fed expecting less rate cuts in 2024, yields declined considerably in both the US and European fixed income markets. Both government and corporate bonds are now offering lower yields (with the exception of high yield corporate bond category). It’s important to note, that despite the current drop, yields on both the US and European fixed income stand well above their 2024 year lows. Therefore, investors can still benefit by locking in the prevailing rates across maturities and quality.
