Investment

August General Market Comments

by Pierre Mouton

August General Market Comments

“Good Times” – Chic, 1979

With all major equity indices  comfortably up so far this year (barring the Chinese CSI300), investors are clearly enjoying good times; added to the pleasant returns delivered by stocks, fixed income and credit also rose in August, helped by the looming rate cuts that the Fed has telegraphed at the beginning of July. The flip side of this optimism is that there are more and more signs of an economic slowdown in the US, which has left investors unscathed at this point because the preferred scenario is a soft landing, not a recession.

In August, the MSCI World added 2.5%, the S&P500 2.3%, the tech-heavy Nasdaq 1.1%, the Stoxx 600 1.3% and the MSCI Emerging Markets 1.4%; the Japanese Topix confirmed its dependency on the JPY exchange rate: while the Yen rose 2.92% versus the US dollar, the Topix fell by the exact same percentage. It is interesting to notice that, in a month of falling yields (usually favouring Growth), the MSCI World Value outperformed the MSCI World Growth (+2.6% vs +2.4%), which is quite an unusual feat. Much more conform to the tradition was the upside move in Gold (+2.3%) when both the dollar and yields fall (-2.3% for the broad dollar index and -13 bps for the US 10 year yields). August marked the end of the Q2 earnings season, which has been good overall; expectations were pretty high though, as shown by the market’s reaction to the spectacular results published by Nvidia: despite a blow-up, the stock fell more than 6% the very day of the earnings release.

So, should you “leave your cares behind” or consider “that it’s getting late”, as sung by Chic? There are pros and cons: softer economic growth is not good for profits, but, at the same time, lower interest rates should help the economy and valuations. Inflation has receded and does not seem to be a threat for now, so the path gets clearer for Central Banks to ease.

 

 

 

 

 

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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October General Market Comments

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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.
Antonio is a Swiss chartered accountant and a Business graduate of Lausanne University (HEC).

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