January Market Commentary

Commentary by Laurium Capital  – Investment Advisor for the Thornbridge Global Opportunities Fund.

Markets

Markets kicked off 2024 pursuing many of the same themes and factors that characterised 2023. Ongoing conflict in the Middle East dominated news headlines and created a tense political backdrop, but investors also had to focus on inflation, US monetary policy and the likely path of interest rates in considering asset allocation and risk appetite.

Interest Rates

Thankfully, it appears that we have finally reached the peak of the global interest rate hiking cycle, a definitive change from last year when investors had to continuously anticipate how high yields were still likely to go (at times it felt we would never reach the end!) as well as how long rates would need to remain at peak levels once that threshold was reached. This change in dynamic was on full display at the Fed meeting at the end of January where the conversation was centred on when the first interest rate cut will take place.

Geopolitics

Geopolitics remained firmly in the spotlight, as strikes from Houthi rebels on commercial shipping in the Red Sea continued to heighten risks for supply chains; upside risks to inflation (already evidenced by soaring freight costs), and potential escalation in the response from Western powers. Oil prices understandably rose, with Brent Crude up +6.1%. Conversely, the iron ore benchmark price lost over 5%.

Economic news emerging from China remained weak and volatile and contributed to a poor month for emerging market asset prices, the MSCI EM Index losing more than 4.6%. Developed markets fared better, gaining more than 1% which left the MSCI ACWI Index with a slight positive +0.5% return for January.

Author: Alex Hackett

Alex is a Business Development Manager and a member of the investment funds team and is involved in portfolio construction, regulatory reporting, trade surveillance and monitoring.