Issue link: https://info.seic.com/i/1534862
A Year In The Markets. Q2 2024 NVIDIA briefly became the highest valued company in the world on June 18th (Economist, June 2024). Why is it news? NVIDIA has taken the world by storm, benefiting greatly from the Artificial Intelligence (AI) boom. They surpassed Apple and Microsoft on June 18th, who have been swapping the top spot since 2012. To give you an idea, since January 2023, NVIDIA's stock price has jumped 694%, compared to Microsoft's 99% and Apple's 60%. Does it really matter? Some investors placed big bets on NVIDIA, and it has paid off so far. While NVIDIA might continue to grow, there is also a risk with such rapid growth. For example, in June, the value of NVIDIA dropped by over $400 billion (13%) (Bloomberg, June 2024). Q3 2024 The US central bank cut interest rates by 0.5% Why is it news? Markets were expecting a more modest 0.25% cut, making the 0.5% reduction a surprising move. The decision came as inflation approached the Federal Reserve's target, shifting their focus to stabilising a weakening job market and addressing rising unemployment. Does it really matter? Rate cuts typically benefit stocks by encouraging investors to move capital from low-yield savings and bonds to higher-return equities. However, if rate cuts are perceived as a pre-emptive measure to stave off a recession rather than a response to stabilised inflation, markets may react negatively. Q4 2024 Donald Trump elected US President again in stunning political resurrection. Why is it news? Four years after leaving the White House, Donald Trump has been given a second chance by millions of American voters and is now the 47th President of the United States. His re-election follows a tumultuous period, including surviving two assassination attempts and a criminal conviction. Does it really matter? In this new Trump era, expectations include aggressive international trade tariffs, stringent immigration policies, and significant tax cuts. These policies could potentially lead to higher inflation and interest rates. The Federal Reserve may need to tread cautiously when cutting interest rates, despite potential pressure from the White House. Q1 2025 U.S. tariffs shake global trade, sparking economic uncertainty. Why is it news? The U.S. ramped up tariffs in early 2025, reigniting global trade tensions and unsettling markets. These measures signal a shift toward economic protectionism, with potential consequences for global supply chains, inflation, and geopolitical stability. Does it really matter? Higher tariffs could drive up consumer prices, disrupt international trade, and strain diplomatic relations. If global economies retaliate, it may slow economic growth and add uncertainty to an already fragile post-pandemic recovery. Source: SEI IMU 3