Situation Assessment & Outlook for the next 6 to 12 months
Our short-term assessment of the development of the financial markets and asset classes.
Review - 1st quarter 2024
The global economic situation continued to improve in the first quarter of 2024. The USA and emerging markets proved to be robust growth drivers. The European economy remained on a rather weak growth trajectory despite a historically low unemployment rate.
Inflation figures have continued to fall in recent months. However, the hopes of the financial markets for rapid interest rate cuts were initially dampened somewhat. In this context, short-term interest rates stagnated, while long-term interest rates rose. Bonds with longer remaining maturities recorded corresponding price falls.
The equity markets benefited from the improved economic environment and the anticipation of falling interest rates. In the USA, the fiscal support measures led to new record highs for the share indices, while US government debt and US share valuations also reached record highs. In a regional comparison, the equity markets in the USA and Germany achieved particularly good results, while the performance in Switzerland was less strong and that in emerging markets was disappointing.
The asset classes of gold, commodities and alternative investments all performed positively in the first quarter of 2024. In terms of currencies, the US dollar gained strength against the euro and the Swiss franc due to higher interest rates. By contrast, the Swiss franc lost value against the US dollar and the euro following the Swiss National Bank's interest rate cut on 21 March 2024.
Current situation assessment & outlook for the next 6 to 12 months
Looking ahead to the rest of 2024, all major asset classes remain attractive. The global economy will continue to improve into the fourth quarter of 2024 and inflation figures will stabilise between two and three per cent, which is why short-term interest rates are likely to fall while long-term interest rates remain at their current levels.
In the bond sector, we are continuing to focus more on corporate bonds with a short maturity due to the yield advantage of one per cent on average compared to government bonds.
Equities are well supported by the economy as well as monetary and fiscal policy. The current euphoria among investors on the stock markets should be interpreted as a negative indicator, which is why temporary price corrections cannot be ruled out. Within equities, Europe remains the favoured region in view of the potential for economic recovery, falling inflation and a reasonable valuation compared to the USA (price/earnings ratio). The high valuation in the USA, particularly for technology stocks, leads to a higher risk of setbacks in the medium term. In this context, we continue to consider risk diversification by region and sector as well as with alternative investments to be sensible and important.
Disclaimer - legal notice
This publication was produced by the Investment Office of the Colin&Cie Group. The information and opinions contained in this document are based on sources we believe to be reliable. However, we cannot guarantee the reliability, completeness or correctness of these sources. All information and quoted rates are only up-to-date at the time of this publication and are subject to change at any time without notice. The content is based on numerous assumptions made by the Colin & Cie Group. It should be noted that different assumptions can lead to materially different results. The forecasts and assessments are only current at the time this publication is prepared and can change at any time without prior notice. Past performance of an investment is not a guarantee of future results. Certain investments can experience sudden and substantial losses in value. This information and views do not constitute a solicitation, offer or recommendation to buy or sell investment instruments or to carry out any other transactions. We recommend interested investors to consult their personal advisor before making decisions on the basis of this document so that personal investment goals, financial situation, individual needs and risk profile as well as further information can be duly taken into account as part of a comprehensive consultation. The information contained in this publication is marketing material that is distributed for advertising purposes only.
