Anchor Insights April 2024

• Stock markets were up in all developed markets, averaging 3% in March and with a first quarter that accumulated 8% for the MSCI World.
• Price improvements in fixed income, both corporate and sovereign in the month, although in the first quarter it ended in negative for governments and slightly positive for credit.
• Energy commodities continue to rise due to the instability in the Middle East.
• The dollar continues to strengthen against the euro.

• Publication of business results at a glance: risks of correction or consolidation.
• The uptick in inflation may be temporary and delay expectations of rate cuts.
• The EUR suffers from expectations of ECB policy change ahead of the Fed.
• Fixed income returns to higher levels of yields due to the delay in the change in the monetary cycle.

Long-Term Opportunities:

• Renewable Energies: the need to decarbonise drives huge plans to invest in renewable energies.
  
• Real Estate: in the face of a stabilisation of interest rates and a readjustment of valuations.
  
• Healthcare & Biotechnology: possibility of a lot of M&A activity in these sectors.

• Tight credit spreads on both European and US bonds. 
• Stabilization of yields on government bonds, both European and American.
• Improvement in the fixed income of emerging countries in "hard" currencies.
  

• The euro and dollar are in the range of 1.11-1.05. Greater tendency to weakness in the USD due to the phase of the monetary cycle in the medium term.
• Correction risks in real estate assets and private equity due to rising interest rates and falling multiples. 
• Increase in the price of oil due to increased demand from China and India. Gold rises on central bank purchases and geopolitical risk.

• Economic slowdown, recession due to tightening of monetary policy.
• Extension of the Israeli-Palestinian war to the Middle East, oil at 200 USD.
• Conflict in Ukraine, escalation of NATO-Russia tension, continued sanctions.
• The persistence of high inflation leads to social tensions and populism.
• Financial fragmentation of the euro public debt market.
• Reduced liquidity in financial markets, volatility.
• Increase in cybercrime, disruptions to essential infrastructures.
• Instability of the banking sector, reduction of access to financing.

• The possibility of not an economic recession is gaining strength in view of the improvement in business expectations. Although the market is pricing in the end of the period of contractionary monetary policy, we are not without some surprises if the geopolitical tension in the Middle East has consequences for trade and the price of oil, resulting in a spike in inflation.
• The release of corporate results improves expectations with significant sales increases and notable profits in consumer, health and technology.
• The war between Israel and Palestine is becoming chronic and spreading in the region, while the conflict between Ukraine and Russia continues. Both occur in key commodity countries, so if these conflicts drag on over time or tension increases, we could see an increase in commodity volatility and higher inflation.