Introduction
World equities were up 2.14% in quarter 3 of 2024, although it was far from plain sailing. We seen equities hit 17.64% returns year to date, but at the cost of some volatility and investor nervousness. This volatility was caused by an interest rate hike in Japan, which had a knock-on effect with Dollar based investors, coupled with weak US economic Data. At this point in q3, the fears of recessions were well and truly rife. Fast forward a couple of weeks, all is back to normal – the joys of investment markets eh!
The US markets closed out on 21.6% year to date, Japanese markets are currently 15.1% & the UK are at 10.9%. More locally, the Irish index is proving to be in a healthy position, sitting at 18.5% year to date.
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 13.13% at quarter end. Slightly more adventurous funds, like an all-equities funds are closer to 19.6% growth for year to date.
What has driven growth in Q3?
Growth drivers in Q3 was pretty much along the same lines as Q2 – inflation rates, economic data & the tech sector.
The key driver was the announcement of interest rate cuts & the stabilisation of inflation rates. The eurozone and the US reported inflation levels of 2.2%, much closer to their desired rate of 2% compared to over 8% in 2023. Furthermore, investors saw an opportunity to avail of low prices when markets took a slight wobble at the beginning of Q3.
Additionally, the resilience of the magnificent 7 and in particular, revised positive earnings figures from Nvidia have continued to be welcomed by the markets.
Rumours of recession in Q2 faltered, however, we did see a little wobble by markets when there were a couple of volatile periods in Q3. That being said, it appears that economic indicators favour a resilient global economy for now.
What to expect for Q4?
Q4’s future will be heavily revolving around the much-anticipated US presidential election. So far in 2024, markets have proven to be lucrative and ultra resilient. In our Q2 update, we were unsure if much growth could be expected for Q3, thankfully this proved incorrect. Q4 will be an interesting period for markets.
Summary
2024 has been kind to the equity investor so far. If you can stomach a bumpy journey, you will be rewarded, both short and long term. 2024 has been a bumpy ride, but hugely positive for those still invested. The final furlong for 2024 is without doubt an interesting one, with all eyes on the 2-horse race on November 5th.
