April 24, 2024

Institutional Views

April 24, 2024

Individual investors are often bombarded with specific stock calls and targets.

However, we believe you can get a better medium to long term perspective by considering asset class, sector, thematic and macro economic views.

To help you, every week, we pour through the research produced by some of the larger institutions, and summarize their market thoughts.

Below are this week’s 6 updates:

JP Morgan

Inflation should continue toward Fed’s 2% target, although bumpy path expected. First rate cut expected in summer 2024.Earnings in information technology and communication services are expected to grow 19.1% and 26.9% y/y respectively. Financials are set to improve, while materials, industrials and health care are expected to see earnings contract, with materials and health care both tracking declines of over 20% y/y. Average decline in natural gas prices of 24.8% y/y in Q1 will likely hamper energy sector results.


Forecast Change: Two Fed cuts in 2024 instead of three, starting from July not June. However, market's reaction over the prospect of sticky inflation is likely overblown. Gold demand likely to rise after the Fed cuts rates because ETF holdings have historically seen positive buying momentum from Fed easing. Moreover, gold offers value as a geopolitical hedge to ongoing issues in the Middle East, Ukraine and with emerging significance in the US election cycle. Outside of further Middle East escalation, upside in Brent may remain limited given elevated OPEC+ spare production capacity, US warning of supply injection, and large inventory builds in Europe. Consider ways to maintain a diversified portfolio to mitigate idiosyncratic risk along with a bias towards quality in their portfolio, for example, markets outside the US, such as the GRANOLAS group of 11 companies that dominate Europe's equity indices.


Year outlook split in two, firstly, cooling inflation and solid corporate earnings would support upbeat risk appetite. Secondly, resurgent inflation would come into view and disrupt sentiment. Second leg beginning to play out, reinforcing expectations for persistently sticky inflation and structurally higher interest rates. Maintain overweight US stocks, yet ready to pivot. Stakes raised for Q1 corporate earnings to buoy sentiment; just as higher bond yields add pressure to equity valuations.

Deutsche Bank

Mar-25 benchmark rates (%): US (4.5-4.75), Eurozone (3), UK (4.25), Japan (0.25), China (3.30).

Mar-25 currency forecasts: EUR/USD (1.10), USD/JPY (145), EUR/GBP(0.86), GBP/USD (1.28)

AND USD/CNY (7.35). 
Mar-25 valuation forecasts: S&P500 (5,300), Stoxx Europe 600 (515), Euro Stoxx 50 (5,000), DAX (18,700), FTSE 100 (7,600), Swiss Market Indx (11,450), MSCI Japan Indx (1,740), MSCI EM Indx (1,050), MSCI AC Asia ex Japan Indx (675).
Mar-25 commodities (US$): Crude oil Brent (84), Gold (2,400), Copper LME (9,500), Carbon (80)


ECB and BOE rate cuts to start in summer but easing slowed by a Fed hold. Expect back-to-back cuts from June to September. UK inflation continued to ease in March, but services inflation is proving more resilient. FOMC communications have pivoted following another round of resilient data and firm inflation, with Chair Powell affirming higher for longer. Base case of a modest rise in JGB yields; stability of government finances marginally improves. Upside surprise in China’s Q1 GDP growth may not be fully capturing underlying developments in the economy.

Bank of America

First Fed cut expectation from June pushed back to December. Higher-for-longer US interest rates entail a stronger-for-longer US dollar. ECB to begin easing from June. Underlying drivers of renewable energy stocks remain strong, global transition toward a clean energy future is still very much in progress.

* Please note these are not the thoughts or analysis of illio but the respective institutions. We have summarized what we believe are key points. We assumes no responsibility or liability for any errors or omissions in the content of this site. The information contained herein is not intended to be a source of advice and the information contained in this website does not constitute investment advice.


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