Investment

July General Market Comments

by Pierre Mouton

July General Market Comments

“May be a price to pay” – The Alan Parsons Project

Volatility is most investors’ foe, but it may be a price to pay at some moments. Unless you’re a very talented trader, you tend to be a victim of wild moves in financial markets, as they trigger high hopes or deep despair and push you to forget fundamentals. As the old say goes, “I know bold traders, I know old traders, but I don’t know old bold traders”. When markets reach certain extremes, combined with important decisions to be made in terms of monetary policies and heightened geopolitical tensions, volatility can be expected. July 2024 has been this type of moment. In order to highlight how volatile July has been, Nvidia, the world’s largest company in terms of market cap and the poster child of the AI craze, has seen its share price vary from a $ 135 high to a $ 103 low, just for the month of July, which means that, without any news about the company’s results to be published in August, its valuation has fluctuated by $ 750 billion, more than 6 times its estimated revenues for the year!

Nevertheless, despite increasing signs of nervousness among investors, equity markets have mostly been positive in July, with the MSCI World up 1.7%, the S&P 500 up 1.13% and the Stoxx 600 up 1.32%. The Japanese Topix, the MSCI Emerging Markets and the Chinese CSI300 receded somewhat, but not alarmingly (between -0.14% and -0.57%). With inflation figures pointing to moderation in the US, yields have tumbled (-37 bps for the US 10 year and -20 bps for the German Bund), propelling Gold to the upside (+5.19%) and the US dollar down (-0.9% versus the euro and -6.41% versus the JPY, the latter having also been buoyed by the BoJ’s wake-up call). If developed markets equities felt the relief of lower interest rates, this was also the case for Credit, as the Itraxx Crossover rose 1.86%. As markets like to surprise investors, this lower yields environment did not favor Growth versus Value stocks: the MSCI World Growth lost 0.97% while the MSCI World Value gained 4.66%.

August 2024 will see the end of Q2 publications and more colour about future monetary policy trends, at a time when valuations are still demanding; volatility should remain steady, and this may be the price to pay for a while.

 

 

 

Past performance is not indicative of future results. The views, strategies and financial instruments described in this document may not be suitable for all investors. Opinions expressed are current opinions as of date(s) appearing in this material only. References to market or composite indices, benchmarks or other measures of relative market performance over a specified period of time are provided for your information only. NS PARTNERS SA provides no warranty and makes no representation of any kind whatsoever regarding the accuracy and completeness of any data, including financial market data or other financial instruments referred to in this general comment. This document does not constitute an offer or solicitation to any person in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it would be unlawful to make such offer or solicitation. Any reference in this document to specific securities and issuers are for illustrative purposes only, and should not be interpreted as recommendations to purchase or sell those securities. References in this document to investment funds that have not been registered with the FINMA cannot be distributed in or from Switzerland except to certain categories of eligible investors. Some of the entities of the NS Partners Group or its clients may hold a position in the financial instruments of any issuer discussed herein, or act as advisor to any such issuer. Additional information is available on request. © NS Partners Group

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Antonio Mira joined NS Partners in 2006 as Group Chief Financial Officer. He heads the corporate functions and is involved in coordinating and implementing the decisions of the Executive Committee.
An experienced bank auditor, Antonio started his career in 1995 with Arthur Andersen, where he worked for some 7 years before joining Ernst & Young in 2002 as a Senior Manager.
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