We are pleased to count you among our Market Compass readers. The monthly publication provides interesting insights and suggestions regarding the current market environment.
Explore the latest trends and strategic insights in the November 2024 edition of the “Market Compass.”
This issue provides an in-depth analysis of the shifting dynamics in the global financial landscape, focusing on earnings season insights and the impact of the US elections.
Highlights Include:
Earnings Season Review: With nearly 70% of Wall Street companies having reported Q3 2024 earnings, the season shows a solid foundation, yet enthusiasm has waned compared to the previous two quarters. While 75% of S&P 500 companies exceeded analyst expectations, the margin of outperformance was narrower than usual at just 4.6%, compared to a five-year average of 8.5%. Disappointingly, major tech companies saw mixed reactions: Alphabet (+3.2%) and Amazon (+0.1%) pleased investors, but Microsoft (-5.6%), Apple (-3.0%), and Meta Platforms (-0.9%) did not fully meet expectations. The S&P 500 closed October down -1.0%, while the EuroStoxx 50 fell -3.5%, impacted by weak performances from ASML and Novo Nordisk.
US Election Impact on Fixed Income: Market dynamics in the second half of October were strongly influenced by the upcoming US presidential election. The possibility of a “red sweep” – a Republican win of the presidency and both houses of Congress – led to selling pressure in fixed income markets, with investors bracing for less budget discipline in Washington. This potential outcome drove 10-year US Treasury yields to 4.3%, while corporate bonds in USD declined by -2.4%. In contrast, European and Swiss rates saw less upward pressure, following a supportive stance from the ECB.
Investment Strategies: Nvidia remains a focal point for investors, benefiting from the AI boom. The upcoming earnings report on November 20 has high expectations and could influence broader tech sentiment, as Nvidia continues to capture significant AI-driven growth.
Market Outlook: After five months of gains, equity markets saw some consolidation in October, influenced by earnings season and the looming election. We expect the potential “red sweep” could spark an initial rally, though medium-term economic implications from trade policies might dampen enthusiasm. Accordingly, we continue to favor a neutral equity allocation with a focus on US stocks and an overweight position in high-quality corporate bonds as a hedge against potential economic downturns. Additionally, we maintain a constructive view on gold, particularly under a Republican landslide scenario, where inflationary policies could further support the case for precious metals.
Ready to dive in? Download the full PDF of our November 2024 Market Compass for an in-depth analysis and forward-looking guidance on navigating these turbulent times in financial markets.
Do not hesitate to contact us with any questions about the topics discussed. We are happy to assist you with our expertise.
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