Market summary – Review of Q3 2024

4 minute read

Our market summary

The third quarter of 2024 ended with most asset classes in positive territory, but the headline figures don’t tell the story of the market volatility experienced in the quarter. In early August disappointing US economic data, an interest-rate hike from the Bank of Japan, and questions about tech valuations all led to a significant sell-off in global equity markets. However, this increased volatility in markets ended up being short-lived. The long-anticipated interest rate cut by the US Federal Reserve (Fed) in September, stronger US economic data, and fresh stimulus in China helped to ease concerns supporting a strong rally at the end of the quarter.

Election super-cycle

US equities advanced over the quarter, but the performance across different sectors was mixed. The quarter saw a broadening of returns away from the big tech names with the utilities and real estate sectors the best performing. Overall, US equities rose 5.9% in dollar terms, but due to the dollar's weakness against the pound, sterling-based investors saw a loss of 0.2%.

Europe

European equities were more muted in Q3 delivering returns of 1.6% in local currency terms. However, returns were again impacted by the strength of the pound and translated into a 0.1% return for sterling-based investors. Economic data highlighted the sluggish eurozone recovery this year, with Germany disproportionately affected by the ongoing global manufacturing downturn, in addition to increased competition from cheaper Chinese imports.

UK

UK equities were up 2.2% over the quarter as the landslide Labour victory in the general election raised hopes of a more stable political backdrop and the beginnings of an economic recovery. This coincided with building expectations of a rate cut by the Bank of England (BoE), which they duly provided in August. The consumer discretionary, consumer staples, and financial sectors were the top performers over the quarter, whilst energy was a significant detractor.

Emerging markets

Emerging markets performed well over the quarter returning 2.6%. This was largely due to the raft of new stimulus measures from Chinese policymakers that saw a surge by Chinese equities in late-September, ending the quarter 16.5% up. Elsewhere, Thailand was the top performer with South Africa also notably strong, whilst India, Brazil, and Korea all underperformed.

Fixed income

Fixed income markets were buoyed by the prospect of lower interest rates with global bonds up 4.1% and global corporate bonds returning 4.9%. Government bonds performed well due to changing investor expectations on interest rates. US Treasuries gained 4.7%, while UK gilts trailed with a return of 2.4%.

Source: Quilter Investors as at 30 September 2024. Total return, percentage growth in pounds sterling except where shown, rounded to one decimal place. The performance shown for global equities is represented by the MSCI AC World Index; US equities by the MSCI USA Index; European equities by the MSCI Europe ex UK Index; UK equities by the MSCI United Kingdom All Cap Index; emerging markets by the MSCI Emerging Markets Index; Chinese equities by the MSCI China Index, global bonds by the Bloomberg Global Aggregate Index; global corporate bonds by the Bloomberg Global Aggregate Corporate Index, US Treasuries by the ICE BofA US Treasury (GBP Hedged) Index; and UK gilts by the ICE BofA UK Gilt Index.

Important Information

Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments may go down as well as up and investors may not get back the amount originally invested.

This communication is issued by Quilter Investors, a trading name of Quilter Investors Limited. Quilter Investors is registered in England and Wales under number 04227837 and is authorised and regulated by the Financial Conduct Authority (FCA) under number 208543. Registered office: Senator House, 85 Queen Victoria Street, London, United Kingdom, EC4V 4AB.

This communication is for information purposes only. Quilter Investors uses all reasonable skill and care in compiling the information in this communication and in ensuring its accuracy, but no assurances or warranties are given. Investors should not rely on the information in this communication when making investment decisions. Nothing in this communication constitutes advice or a personal recommendation. This communication is for information purposes only and is not an offer or solicitation to buy or sell any Quilter Investors portfolio or fund.

Any opinions expressed in this document are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or companies within the same group as Quilter Investors as a result of using different assumptions and criteria.

Data from third parties is included in this communication and those third parties do not accept any liability for errors and omissions. Investors should read the important information provided by the third parties, which can be found at www.quilter.com/third-party-data. Where this communication contains data from third parties, Quilter Investors cannot guarantee the accuracy, reliability or completeness of the third-party data and accepts no responsibility or liability whatsoever in respect of such data.

Marcus Brookes

Chief Investment Officer & Managing Director

Marcus is chief investment officer and managing director of Quilter Investors. Marcus joined Quilter Investors in December 2021 from Schroders Personal Wealth, where he also held the role of chief investment officer. He has considerable investment management experience with a deep understanding of the multi-asset sector having managed multi-manager fund ranges for more than 20 years.

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