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  • Anchor Markets
  • Anchor Insights February 2024

Anchor Insights February 2024

Anchor Insights

The vision of our Investment Committee to tactically adjust the appropriate investment strategy to the financial markets in any environment.

Anchor Insights February 2024

Market Wrap

  • Beginning of 2024 with developed country stock markets on the rise, close to 1%, while emerging countries are falling. Japan shines with 8%.
  • Stable fixed income, with the debate open on future rate cuts.
  • Energy commodities rise due to the instability of the Middle East, gold falls due to the strength of the American economy.
  • The dollar rises on strong jobs data.

Insights

  • The published results of Q4 far exceed expectations and may help to new highs.
  • The escalation of tension in the Middle East may bring inflationary spikes.
  • The USD could suffer from the Treasury's financing needs and the spending ceiling.
  • China purges its economy, but it doesn't quite convince.

Equity

Invest in companies that have the capacity to pass on price increases without a loss to sales and a high cash conversion of their results. Prepare for a sideways market evolution in the face of high valuations and low economic growth.

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.
  • Health & Biotechnology: Possibility of M&A activity in these sectors.

Fixed Income

Central banks won't cut rates until they target inflation. Possible temporary readjustments in intermediate tranches, but we do not expect new highs in IRR.
In general, all fixed income is attractive at current prices, although we prefer investment-grade and duration-grade corporate.
The level of defaults in US high yield could have peaked, so the better return-to-risk ratio in USD. The high yieid in EUR also presents better prospects.

  • 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.

Alternatives & Currencies

  • The euro and dollar are in the range of 1.11-1.05. Greater tendency to weakness in the USD by phase of the monetary cycle.
  • Correction risks in real estate assets and private equity due to rising interest rates and falling multiples. 
  • Stabilization of the price of a barrel due to supply cuts by OPEC+.

Risks

  • 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.

Macroeconomic Environment

  • The economic slowdown is beginning to be felt in the most interest-sensitive sectors, while inflation continues to decline. 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.
  • The release of corporate results signals the end of the adjustment in earnings growth in a disparate way between economic sectors, but improves expectations with significant increases in sales 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.
01 Feb Anchor Insights February 2024
Posted By Anchor 0 Comment(s) 2038 View(s) Anchor Insights

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+34 931 820 036

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