Omnis Managed Portfolio Service
October 2024 | Monthly update
Market-moving events
Feds cut rates but data remains mixed. The US Federal Reserve cut rates by 0.5 percentage
points, marking the first reduction since the pandemic. While the unemployment rate dipped to
4.2%, job creation fell short of expectations. Inflation eased to 2.5%, but core inflation stayed at
3.2%. Despite the mixed data, US growth was revised up to 3%, supported by strong retail sales.
China stimulus boosts stock markets. Chinese share prices rose after new stimulus measures
were introduced, including lower borrowing costs and expanded lending. But bond markets
remain wary as concerns persist over the property sector and consumer demand. Youth
unemployment hit a record 18.8%, while industrial production and retail sales both slowed.
Bank of England holds rates steady but hints at cuts. The Bank of England kept interest rates
at 5% after inflation stayed above target. However, Governor Andrew Bailey suggested rates
could be cut gradually if inflation continues to fall. The UK economy saw no growth in July, but
unemployment dropped to 4.1%, and wage growth slowed slightly.
Investment highlights
Relative performance. Most equity markets were flat or slightly positive, with Asia standing out
due to Chinese stimulus. Small caps outperformed large caps as interest rate cuts continued.
Growth marginally outperformed value, while both corporate and government bonds delivered
steady returns. Emerging markets outperformed developed markets.
Tactical asset allocation. Rate cuts should pave the way for out-of-favour asset classes to come
back into favour, including value, small cap and sovereign debt. Investors are already tilting
their portfolios to these areas. Our diversified portfolios hold all these asset classes and we’ll
continue to make tactical decisions to capture opportunities we identify.
We remain cautiously positioned. We have an overweight allocation to bonds and slight
underweight in equities. Although stock markets have rallied, a weaker economy could put
pressure on company revenues. Our central case remains falling inflation, a peak in the interest
rate cycle and a soft landing, but with a larger than normal risk of a deeper recession.
Asset allocation
Take a look at our latest asset allocation in the Omnis Managed Portfolio Service.
Issued by Omnis Investments, which is authorised and regulated by the Financial Conduct Authority. Registered address: Auckland House, Lydiard Fields, Swindon SN5 8UB. This update reflects our view at the time of writing and is subject to change. The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your financial adviser. Omnis Investments is unable to provide investment advice. Every effort is made to ensure the accuracy of the information but no assurance or warranties are given. Past performance should not be considered as a guide to future performance. Approved by Omnis Investments on 2 October 2024.
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