Investment strategy - 2nd quarter 2024
Daniel Varela, CIO, shares with you our investment convictions for the 2nd quarter of 2024.
After the SNB's announcement, should we expect further rate cuts?
The tightening of monetary policy is officially over. The Swiss National Bank surprised many investors by initially cutting its main policy rate with further cuts are expected this year.
Indeed, other central banks are likely to follow suit, starting with the two largest: the US Federal Reserve and the European Central Bank could cut their rates as early as the beginning of the summer.
This monetary easing has been made possible by the strong disinflation observed around the world last year. This trend is may well continue over the coming months. Following the slowdown in goods prices, inflation in services is also beginning to subside.
What is the outlook for the global economy?
We are at the start of a new economic cycle, and it is getting off to a good start. Despite the headwinds we have faced since the pandemic, the United States maintains positive momentum, and China has managed to protect its growth despite the problems experienced in its property sector.
Despite Germany's difficulties, the eurozone has succeeded in avoiding the deep recession to which it seemed doomed due to the war in Ukraine and the energy crisis.
With household savings high and corporate debt relatively low, future rate cuts are likely to support a marked acceleration in spending and investments.
What is the outlook for the financial markets?
Monetary easing should be good for bond assets, where nominal and real yields have not been as high for a long time. That said, we believe that equities offer greater potential.
In fact, the context of economic recovery and monetary easing is usually favourable for stock markets. The positive trend is therefore likely to continue.
In terms of our asset allocation, we are letting ourselves be carried along by the rise in the stock markets and we are increasing our exposure to equities, particularly in America. We are also increasing our position in gold, which is benefiting from large-scale purchases by central banks and from falling interest rates.
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