Issue link: https://info.seic.com/i/1523677
Executive Summary • Despite a few bumps in the road, the second quarter of 2024 saw a handful of U.S. mega-cap stocks continue to dominate market returns. Fixed income markets stalled as interest rates remained higher than expectations and commodities offered good diversification for investors. • UK Prime Minister Rishi Sunak and French President Emmanuel Macron called snap elections, both seemingly failing to keep them in charge while also leading to declines in European stock and bond markets in late June. • An embattled China spluttered once again in Q2 as its ailing property sector continued to cause headaches. The government has returned to previous tactics of fuelling the manufacturing sector however, at present these measures are failing to reignite growth. Economic Factors Interest Rates • The ECB was the first of the major central banks to cut interest rates, while the U.S. and UK held firm, with expectations for rate cuts in 2024 falling due to core inflation remaining above target levels and no signs of economic growth easing suddenly. Inflation • Inflation remains elevated but stable, with wage growth sitting above inflation levels causing real incomes to grow across developed economies. Economic Growth • U.S. GDP growth slowed in the quarter from 3.5% to 2.2%. While not recessionary, it is still a sign of an expected stagnation. Meanwhile Europe continues its slow convergence to U.S levels of economic growth. Tactical Views Commodities • Oil prices dipped during the quarter but recovered later. Commodities tied to China were cautious due to economic challenges. Current heightened global tensions and political uncertainty continue to keep commodity prices and inflation higher. U.S. Large Cap Equities • Q2 earnings of the "Magnificent 7" (Amazon, Apple, Alphabet, Microsoft, Meta, Nvidia, Tesla) remained well above the rest of the global market. To hit current targets however, the S&P500 needs to grow above 16% a year (in line with all-time highs)! Legend SEI's Current View: Direction of movement from previous: SEI Quarterly Update. Q2 2024 This is a marketing communication For use by advisers of regulated intermediaries in the UK in acceptance with all applicable laws and regulations Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic Pessimistic Optimistic