Quarterly Investment Report – October 2024

Shifting Landscape

As we enter the closing stages of 2024, the global landscape is undergoing a notable transformation. Donald Trump’s re-election, alongside a Republican majority in the House and Senate, has introduced a refreshed stance on geopolitics, fiscal policy, and international economic growth, reshaping the financial horizon.

Below is a summary of our latest quarterly report, which examines the key themes driving markets and the risks and opportunities for the end of the year and beyond.

Summary of latest insights

• US Momentum – Trump’s re-election and a Republican majority have bolstered US markets. Anticipated tax cuts will likely enhance corporate profitability, creating an encouraging landscape for economic activity, including mergers, acquisitions, and IPOs.

• Careful of Valuations – With much of the optimism already priced into markets, we see an increasing risk of some price consolidation before year-end. Rising bond yields, alongside elevated equity valuations, underscore the importance of staying vigilant in this environment.

• Global Pressure From US Policies – A stronger US dollar and higher bond yields negatively impact international markets, including Australia. Concerns about tariffs add some uncertainty, though historically, such trade measures tend to generate more noise than lasting impact.
  

• Portfolio Positioning – Our client portfolios are well-positioned for various scenarios, so no major post-election adjustments have been needed. Consequently, the Advisory Board’s asset allocation remains steady this quarter. We are selectively adding inflation-protected assets amid rising fiscal deficits and gradually increasing global equity exposure during market pullbacks.

^{General Advice Warning: Any comments in this communication do not consider your objectives, financial situation or needs. Before acting on any general advice, consider whether it is appropriate for you.}