Introduction
Quarter 2, 2024 continued its positive growth trend, with world equities achieving just over 15% year to date. We have seen the majority of large world indexes reach their all-time highs during this period, further cementing growth indications.
The US markets have not yet faltered, despite election season well and truly kicking off, with the S&P 500 up over 14.5%. Similarly, European markets are up just over 11%. The Japanese markets have continued a powerful rally, sitting at just under 20% growth across Q1 & Q2. On a local level, the Irish index has enjoyed moderate growth of 8.8%.
When we look at these indexes combined, as part of an investment strategy, the retail investor has enjoyed a successful first half of 2024. The famous 60/40 portfolio is currently sitting at around 10.8% at quarter end. Slightly more adventurous funds, like an all-equities funds are closer to 18% growth for year to date.
What has driven growth in Q2?
A common theme throughout 2024 has been AI, and this has shone through to investment markets. Tech stocks have continued to grow comfortably throughout 2024, and the bullish sentiment appears to still be a common factor for investors. Quite staggeringly, Nvidia closed out Q2 on over 77% growth for the year to date.
From an economic perspective, inflation has been stable, and in fact, seen a slight drop across markets. This has bred optimism in markets, and we saw this through the European Central Banks rate cut in June of this year. Furthermore, the UK have managed to drop their inflation rates to the desired 2% level. The US have had a slightly more challenging experience with their fight with inflation, but nothing for market concern.
Finally, in general, it is widely accepted that the risk of recession has faltered. Economic growth figures across all the major markets point to a reduced risk of recession, which has been openly welcomed by markets.
What to expect for Q3?
It is our belief that a lot of growth has likely been achieved so far. A significant level of political activity is expected to take place and will be sure to be a strong influencing factor on markets. More locally, a general election has also been spoken about and this will also likely have a knock-on effect on the financial services / investment markets. It is difficult to say if Q3 will be as strong as Q1 & Q2, but it certainly will be an interesting time for investment markets.
Summary
Q2 was similar to that of Q1 – it rewarded the equity investor. If you absorbed some risk, you were rewarded. The same common drivers were present and were very much so a positive factor. Going into Q3, it may not be as strong performance wise, but this is only a mere blip on a well thought out investment journey. Don’t be reactionary, let the investment markets do their thing!
