PERSPECTIVE3-5 min to read

Webinar: Market update and economic outlook – January 2024

Watch the video to hear Kate Leppard, Head of Client Service, in conversation with Cazenove Capital’s investment team, or read the summary below.

24/01/2024

Authors

Kate Leppard
Head of Client Service, UK Wealth Management
Caspar Rock
Chief Investment Officer
Grace Lavelle
Investment Strategy Director
Ahmet Feridun
Deputy Chief Investment Officer

In terms of elections, the US is the hardest one to call. Even if it is Trump vs. Biden, the impact on markets is far from clear. When Trump won in 2016, markets were initially downbeat. But they became much stronger after he introduced tax cuts for corporate America. So there may be market moves in response to policy announcements over the next few months but, at the moment, it’s very hard to predict.” – Caspar Rock, Chief Investment Officer

  • We expect global economic growth of just over 2% for this year, which is meaningfully slower than last year when output probably expanded by around 2.7%.
  • Markets seem to be taking a binary view, swinging from extreme optimism over a soft landing and interest rate cuts to more recent anxiety around recent persistent inflation and high interest rates.
  • This year is one of elections, with around 50% of the world’s population going to the polls. Historically elections have an insignificant impact on markets, but there are exceptions – like the US – that could have an impact.
  • We currently have a neutral stance on equities. Japan is our main overweight and highest conviction equity position. We have also been adding to our US equities.
  • We are reducing our exposure to alternatives to take advantage of more attractive opportunities elsewhere, mainly by trimming absolute return funds and gold. Absolute return is seeing a more challenging environment. We still like gold, especially as a geopolitical hedge, but we are taking advantage of recent strength to reduce our exposure.
  • Commodities are a small component of our portfolios. We like them as they act very differently compared to other asset classes. They can potentially help to protect against exogenous shocks such as conflict and unexpected weather patterns. For example, we are currently seeing a lack of water impacting the flow of goods through the Panama Canal – and too much water in the Rhine hurting trade in Europe.
  • We are seeing attractive opportunities in the UK, with some assets currently looking very cheap, but the key is to be selective. 

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Authors

Kate Leppard
Head of Client Service, UK Wealth Management
Caspar Rock
Chief Investment Officer
Grace Lavelle
Investment Strategy Director
Ahmet Feridun
Deputy Chief Investment Officer

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