A good investment strategy goes a long way

See how our investment strategy responds to economic and financial events.

A good investment strategy goes a long way

See how our investment strategy responds to economic and financial events.

Strategic independence unleashes countries, companies and investment opportunities

The world is moving toward a mindset of more "strategic independence," a new geopolitical trend it's best to consider as an investor. Mark Van Assche, Private Banking and Wealth Office account manager, talks about it with Anthony Cruysmans, equity portfolio manager at KBC Asset Management.

25-01-2024

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What’s happening in the world? And what are the implications for the financial markets? 

Update February 22, 2024

Economy

  • Economic data points in the manufacturing industry and the service sector seem to be gradually stabilising, including in Europe.
  • The US economy remains robust due to continued low unemployment and strong consumer spending. As a result, economic growth in the US continues to do surprisingly well.

Oil price - inflation

  • In both the US and Europe, the (core) inflation trend is still tilted to the downside, with occasional brief flare-ups in the interim.
  • In China, producer prices are dipping below zero and consumer price growth is fluctuating around that level, too. 
  • Oil prices remain volatile.

Fiscal and monetary policy

  • The exceptional stimulus programmes are being scaled back, but there is no sign of savings drift. Programmes such as EU Next Generation and the Inflation Reduction Act in the US are still substantial and continue to offer considerable support. China is also stimulating its flagging economy. 
  • Central banks in the US and Europe have raised key rates at an unprecedented pace over the past 16 months in an effort to slow growth and cool inflation.
  • At their January meetings, the banks confirmed not only that things were moving in the right direction, but also that it wouldn’t be appropriate to cut key rates until there were more indications that inflation was moving persistently towards 2%.

Bond markets

  • Interest rates appear to have peaked. 
  • However, central bank members regularly blow both hot and cold in their press conferences regarding the timing of their monetary policy adjustments. As a result, we still see interest rates making occasional bucks, which immediately affects bond prices.

Equity markets

  • Sentiment is positive for the asset class, as inflation is on track and interest rates are lower than last year. The outlook for company results in 2024 may be slightly overly positive, but the market doesn’t seem to be particularly worried about it for now. 
  • The first results for the fourth quarter of 2023 have been better than expected – driven by technology companies – but then again expectations had been exceptionally low.

Risks

  • Oil prices are particularly volatile but remain below the recent peak of September 2023.
  • This is fuelling the current prevailing expectation of lower inflation. However, the conflict in the Middle East may continue to cause nervousness. 
  • Not an easy environment, therefore, for policymakers to take decisions on interest rates.
  • The US elections could also give rise to volatility later this year.

Continuing better-then-expected economic data propelled US stock markets to a new all-time high. Geopolitical uncertainty remains. Government bonds lost ground as investors scaled back the prospect of rates being cut in the first quarter following recent central bank meetings.

Siegfried top, Senior Investment Strategist KBC Asset Management

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