Cappuccino Commentary

May proved to be a decent month for both equity and bond market returns which were boosted by improving economic conditions coupled with anticipation of interest rate cuts by the Bank of England (BOE) and the Federal Reserve (FED) later this year.  There were some exceptions with small losses in Japanese equities and Global Government bonds however most of this was attributed to currency moves as Sterling rallied against most other developed currencies.

After interest rates peaked in November 2023, investors began to eagerly anticipate the point at which the Bank of England, the Fed and their counterparts would consider the battle against inflation won and begin to cut interest rates.

Most asset classes posted gains in March on the back of improved economic data globally as well as expectations that central banks will begin cutting rates by year end 2024.

February was generally a good month for equities with both Developed and Emerging markets posting gains while the UK was roughly flat over the period.

The start of 2024 has delivered a mixed bag in terms of returns. Developed equity markets were generally positive, (except for the UK), while it was a much tougher start to the year for emerging markets, which sold off in the region of -4.0%.

December was a “sea of green” with the majority of assets delivering positive returns. Markets were buoyed by the cooling of inflation and expectations for dovish monetary policy in 2024.