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Wealth Guru

Your one-stop-shop hub for all market updates you need to know

Market Insights brought to you by our CIO

Where will the financial markets head towards? Check out how our Chief Investment Office (CIO) sees it.

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Fed signalled one rate cut in 2024 – US stocks closed at record highs

  • Key Takeaways: Fed officials voted to keep benchmark rates unchanged, but reduced the number of rate cuts they expected this year from three to just one.
  • CPI Slowed: The hawkish revision in the dot plot came as consumer prices unexpectedly came in unchanged in May, with core consumer prices, which exclude food and energy costs, also rising less than expected (0.2% m/m, 3.4% y/y).
  • Market Reaction: The 2-year bond yield still closed lower for the day, with money markets now pricing in a rate cut by November. US stocks closed at record closing highs for the third consecutive session on Wednesday.
  • FX Market: The USD index (DXY) fell after US inflation moderated more than expected in May. It slightly pared loss after the dot plot showed just one cut this year from three prior. AUD/USD rose, leading gains among G10 currencies amid the softer greenback.
  • Asset Class View: We are overweight Global Equities, and high quality bonds offer attractive yield and moderate price gain prospects.

For full market outlook insights, read our latest Daily Navigator now.

Fed signalled one rate cut in 2024 – US stocks closed at record highs

Fed officials voted to keep benchmark rates unchanged, but reduced the number of rate cuts they expected this year from three to one. The hawkish revision in the dot plot came as consumer prices unexpectedly came in unchanged in May, with core consumer prices also rising less than expected. When does the market expect to start cutting rates? Which asset class do we prefer?

City, Urban, Car
City, Urban, Car

Overweight US & JP equities – Short-term volatility creates opportunities

  • Buying opportunities: The equity market pullback and the rise in bond yields have created an opportunity to add exposure to diversified Foundation allocations.
  • Rate cuts in H2: We expect inflation to resume downtrend in H2 as official shelter prices catch up with declining market rents. A gradual decline in inflation is likely to allow a total 50bps of cuts this year.
  • Overweight US equities: Its growth resilience, sensitivity to rate cuts and earnings.
  • Overweight Japan equities: Its ongoing focus on shareholder-friendly reforms and continued JPY weakness
  • Asia ex-JP equities: We are Overweight Korea and Taiwan to benefit from the AI frenzy. We also favour India on its strong domestic growth.
  • Opportunistic ideas in China non-financial high dividend SOEs: Management continues to have an incentive to improve their market value.

For full market outlook insights, read our latest GMO Report now.

Overweight US & JP equities – Short-term volatility creates opportunities

With the delayed expectation of a Fed rate cut, how should we revamp the strategies for global equities and bonds? As the Hong Kong stock market shows signs of a technical bull market, what steps should be taken to capitalize on opportunities in the Asian market?

City, Water, Waterfront

The Fed’s potential mid-year rate cut unleashes opportunities!

  • Rate Cut: The Fed and the ECB may cut rates in concert starting mid-year.
  • Overweight Global Equities: We prefer US and Japan markets. In Asia, we are Overweight Korea, India and Taiwan equities.
  • Seeking Income: We still see an attractive opportunity in global bonds, but yields may fall less than previously expected.

For full market outlook insights, read our latest GMO Report now.

The Fed's potential mid-year rate cut unleashes opportunities!

Global equity markets hit record highs while bond markets saw swings in Q1. When will the Fed cut rates? Will the stock market continue its strength? How can one seek income to achieve higher potential returns?

City, Water, Waterfront

Can our travel cost benefit from foreign currency fluctuations?

  • JPY: 100 JPY may fall to the edge of 5.1 against HKD in the next 3 months.
  • GBP: GBP/HKD is likely to rebound to 10 over the next 3 months.
  • AUD: AUD may be more resilient and rise to 5.3 level versus HKD on 3-month horizon.

For full market outlook insights, read our latest GMO Report now.

Can our travel cost benefit from foreign currency fluctuations?

The JPY hit a 30-year low during Q1. Market speculations suggest a possible rate cut by the Fed around mid-year. What will be the impact on the USD? Which currencies will be the key outperformers?

Market Event Insights

How will these events impact the market?

21 March 2024

As expected, the Fed kept the interest rate unchanged. Let’s take a minute to understand the key insights from this interest rate decision!

 

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