News | Monthly Update: March 2024

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5th March 2024

Global Outlook

The Magnificent Seven continued to rally with NVIDIA leading the charge. Microsoft, Google parent Alphabet, Amazon, Apple, Meta, NVIDIA, and Tesla comprise this group of shares, generating significant investor hype and buzz. Most of these companies are household names and play an integral role in our daily lives. They have gained traction, primarily driven by advancements in Artificial Intelligence (AI), with these companies seen as the primary beneficiaries. A&J have exposure to the Magnificent Seven, but we are cautious of the extreme valuations observed and question their sustainability.

Regarding key economic data, the Federal Reserve delayed the timeline for rate cuts, exacerbated by US inflation surpassing expectations. The UK also experienced a minor recession at the end of 2023, but most commentators remain optimistic, noting signs of an upturn. Bank of England Governor Andrew Bailey stated that the UK economy is displaying signs of recovery from the recession, anticipating a boost as interest rates decrease later this year. Bailey even mentioned that they “do not need inflation to return to target before cutting interest rates.” The UK economy remains nearly at full employment, which bodes well for economic growth. Coupled with anticipated interest rate cuts in 2024, this makes the UK an attractive place to invest. UK share valuations appear undervalued, prompting an overweight A&J position in this region, contributing positively to A&J portfolio returns.

In the US, January’s inflation figures exceeded expectations, pressuring US markets and delaying projections for interest rate cuts. However, the market’s reaction appears exaggerated. Inflation expectations are still declining, and the Federal Reserve considers this the most crucial factor in forecasting its interest rate cycle. January’s inflation reports can be volatile, with expectations for decreased volatility in February. Our view on inflation remains unchanged, with the Federal Reserve maintaining its stance based on comprehensive data analysis. However, a similar surge in inflation in February could alter the narrative, and A&J will monitor this closely.

China has shown signs of resurgence, bolstered by government-directed state-backed funds to support the market. According to UBS Group AG’s estimates, these funds injected over 410 billion yuan ($57 billion) into domestic shares this year, with expectations of further purchases. This support is evident in the SSE Composite Index, up 11% from February 5th to 28th, indicating a possible sentiment shift in the region. A&J have exposure to this region, with our funds showing a strong rebound in performance.

Politics is currently less prominent in investors’ minds, but upcoming elections will impact stock market sentiment. The likelihood of a November election showdown between Joe Biden and Donald Trump seems increasingly probable. Campaigning will intensify closer to the election, with interest in polling as November approaches. In the UK, Chancellor Jeremy Hunt will present the budget on March 6th, with speculation about potential tax cuts. In addition, The government’s record budget surplus of £16.7 billion in January could provide room for tax cuts. With the election looming, the Conservatives have an opportunity to make headlines and secure potential votes. A&J will publish a guide to the Budget to help decipher any changes to the tax system.

A&J Outlook

2023 continued the recovery in risk assets following what appeared to be the peak of inflationary pressure in global economies and also the peak of interest rates with a now likely downward trajectory. Value equities offered more protection against downside threats compared with their growth peers, as they tended to benefit most from strong recoveries after recession and trade on lower earnings multiples. 

We still like selective growth stocks where there remains true innovation and potential for change, especially recent trends in consumer behaviour that were accelerated by the pandemic but prefer value equities on the whole. We also continue to hold our overall equity weighting at neutral. Fixed income has started looking more attractive with yields now at levels not seen in well over a decade. Bonds also remain an important diversifier in our portfolios. With inflation having seemingly peaked, we believe interest rates could begin to head lower as fears of a global recession pick up. 

Duration has become appealing again as market participants shift their primary concern away from inflation and towards growth fears. We also hold an allocation to cash to offset some of this fixed income risk and dampen portfolio volatility. We have also been adding ‘alternative’ assets to the portfolios, which offer low-to-negative correlations to traditional asset classes (stocks and bonds) and give the potential to protect during times of significant market volatility, such as we are seeing at present.


The UK market is very value-tilted and despite positive relative performance it is still highly attractive on a valuation-basis. The UK economy has also recovered well from the pandemic, though economic growth is faltering. The main driver of UK equity outperformance will be relative valuations.


There is good value to be found in European equities and the region is attractive given historic valuation differentials to the US, and financial companies stand to benefit with interest rates on the rise.

United States

The US represents poorer value relative to the rest of the world due to the high proportion of tech companies that still command a multiple far in excess of the broader market, however it also has the best long-term earnings growth and some of the most outstanding quality companies, as well as the most innovative. In times of global stress, the US also tends to act as a safe haven investment, which props up markets. We have increased our US exposure as we do believe the US will remain an attractive investment option in the long-term, but with some obvious headwinds making us more cautious for now.


Japan defied all expectations in 2023 and was the real standout relative performer. In the future, Japan is anticipated to face heightened exposure to cost-push inflation characterised by volatility. This is attributed to escalating geopolitical risks, the impact of climate change, and elevated wages resulting from labour shortages stemming from the country’s diminishing working-age population. Thus, we expect poor relative equity performance from Japan. In the short-term, attractive valuations in the region may boost markets, but this will likely be short-lived.

Asia Pacific & Emerging Markets

Asia Pacific and Emerging Markets (EM) are predicted to see exceptionally strong GDP growth over the next several years and thus we are comfortable maintaining an overweight position. We currently like frontier markets as a more attractive investment option within the EM universe. Typically, market move in cycles and EM vs US performance is no different. We have been in an extended period of US equity outperformance, and we now expect this trend to change in favour of EM stocks. Emerging markets are projected to experience a challenging beginning to the year due to factors such as elevated interest rates, geopolitical changes, and the persistent strength of the US dollar. Nevertheless, as the growth trajectories of emerging markets and developed markets diverge, along with a growing demand for diversification away from the U.S. and relatively low investor positioning, EM is expected to become increasingly attractive this year.


The opinions expressed in this update are those of A&J Wealth Management Limited only, as at 28th February 2024, and are subject to change. 

The content of this publication is for information purposes and should not be treated as a forecast, research, or advice to buy or sell any particular investment or to adopt any investment strategy.  It does not provide personal advice based on an assessment of your own circumstances.  Any views expressed are based on information received from a variety of sources which we believe to be reliable but are not guaranteed as to accuracy or completeness. Any expressions of opinion are subject to change without notice.

Past performance is not a reliable indicator of future results. Investing involves risk and the value of investments, and the income from them, may fall as well as rise and are not guaranteed. Investors may not get back the original amount invested.

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