Schroders Equity Lens February 2024: your go-to guide to global equity markets
Performance in rate cutting cycles, cracks in concentrated markets, an emerging market earnings revival, and everything else you need to know about global equity markets this month.
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Summary:
Stocks have returned 11% above inflation in the 12-months after the Federal Reserve (“Fed”) starts cutting rates, on average – based on analysis of 22 rate cutting cycles since 1928 (slides 5 and 6 and read more).
Average returns have been better if a recession is avoided but good even if one has not. Stocks have beaten bonds and have obliterated cash, on average (slides 5 and 6).
The Magnificent-7 are up 89% since start of 2023, the rest of the world 17%. They make up more of MSCI ACWI than Japan, UK, China, France, and now Canada too, combined (slides 7-8).
But this masks cracks among the seven. They are not a homogenous group in terms of their businesses or share price performance. Three of the seven have underperformed the rest of the market since September (slide 9)
Deviating from the market has been a winning strategy when concentration has been high (slide 10 and read more)
EM earnings are forecast to accelerate 18% this year: will this revive stock market returns? (slide 18)
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