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The market at a glance: Keep moving
"Move along. There is nothing to see here." When markets dropped in April, many of us crowded around the accident scene, hoping to see something intriguing. The most sarcastic investors were already putting forward all kinds of doom-and-gloom theses: "A recession is coming," "The long-awaited market crash is around the corner," "The Fed did this," "Sell in May and go away...".
While we were dispersed and let our speculations continue, we barely noticed that there was indeed nothing to see or rather nothing new. The markets bounced back, bringing rather good performance to our portfolios.
The speculation has not really stopped; we have to deal with the same concerns that have been more or less the same for the past two years, but once again, we have to move along. So, to encourage that move forward, we picked this rather upbeat song released in 2021 by the British music project Jungle, "Keep Moving".
In the absence of bad news, that's possibly the best strategy, but let's review first what happened in the markets.
Key market updates from May 2024
When markets dropped in April, many of us crowded around the accident scene, hoping to see something intriguing. But the best course of action was to keep moving.
Equity markets bounced back in May, with US stocks up 4.8% and Swiss equities leading with a 6.6% gain.
The bond market remained volatile due to central bank indecision on interest rates, though the month ended positively for bond portfolios.
The Swiss Franc appreciated against the dollar and Euro, driven by better-than-expected GDP growth and the Swiss National Bank's steady rate policy.
Cryptocurrencies gained political attention in the US, Bitcoin ETFs saw fresh inflows, and the SEC approved the first Ethereum ETF.
What happened with equities
Equity markets reminded us once again of their capricious nature. After a drop in April, markets bounced back in May, with major indices closing the month on a positive note.
Interestingly, the list of leaders and laggards differed from previous months. European and Japanese stock markets, which had been leading since the beginning of the year, lagged behind with gains of 1.3% and 0.2%, respectively.
Emerging markets showed strength, particularly in Asia, where China's markets began to stabilize following government stimulus measures. The US stock market rose by 4.8%, but the top spot was taken by Swiss equities, which recorded a gain of 6.6%, a sharp change after months of sluggish growth.
Continued liquidity injections, better investor sentiment, and strong corporate earnings were the main drivers behind the rebound in the equity markets. As the earnings season comes to a close (every quarter, companies around the world report their results to investors, providing an opportunity to gauge the economy's health), the outcome is positive. Not only did the largest tech companies that investors revere (Apple, Nvidia, Meta, Google, and others) meet or exceed expectations, but other companies also returned to positive earnings growth. And that's good news.
Economic data was rather encouraging as well. On a funny note, the Eurozone was officially declared out of recession in May. I bet you probably didn't know that the old continent was in recession for part of 2023…
When you think about how much time investors spend worrying about the impact of recessions on markets, one can wonder what the point is if we don't even notice them. Better keep moving!
What happened with bonds
In the bond markets, the yo-yo continues. Investors, driven by the indecision of central banks about the future course of interest rates, react to even the slightest news. The rules are clear: higher inflation means higher rates and lower inflation means lower rates. But for about a year, the growth rate of inflation has been rather constant. Investors seem to struggle with this flat line, as it is not in the playbook.
Overall, the month was positive for bond portfolios, but as long as the European Central Bank and the Federal Reserve don't make a definitive move, rates will continue their pendulum swing. Let's see if the Swiss National Bank continues its solo journey next month and cuts rates again although the odds don't favour this scenario for now.
What happened with commodities, currencies and digital assets
A bit of a mixed bag in the commodity markets. Oil went down, as OPEC+ production cuts put downward pressure on the price. Gold continued its upward trajectory but at a slower pace, and the industrial metals' crazy run came to a halt.
The Swiss Franc regained strength against the dollar and the Euro. The reasons behind this move include a better-than-expected first-quarter GDP—our economy grew by 0.3%, with positive news on the consumption and services front—and an increased likelihood that the SNB won't cut rates.
Finally, on the digital markets front, we saw interesting developments. Cryptocurrencies took over political debates in the US. Once a skeptic, Donald Trump seems to have turned into a big fan overnight. Bitcoin ETFs saw fresh inflows of money, and Ethereum was not left behind: the first ETH ETF was approved by the SEC earlier this month, offering new perspectives for the contender.
To conclude, May was a positive month for markets overall. However, only the investors who moved along after a shaky April enjoyed its benefits. It's a good reminder that turbulence is part of the game, and in the absence of clear signals, it's best not to change the composition of portfolios too hastily. It seems we've been dealing with the same news and concerns for almost two years now. Until there is something new to see, let's keep moving!
Money Mixtape: Your 5-minute financial podcast!
Do you like the musical format of our market update? Then make sure to listen to “Money Mixtape” on World Radio Switzerland, the 5-minutes radio show that puts finance into music! Here's what we covered this month. We're live every Monday at 08:45 am!
For now, you can listen the previous episodes here:
Demystification room – Be aware! Cybercrime
Once in a while, let’s demystify a non-financial topic, that relates to the protection of your wealth. There’s a segment of activity growing way faster than inflation - hackers, scammers, and fraudsters, all belong to a very lucrative industry - Cybercrime!
In its semi-annual report for second half of 2023 published in May 2024, the National Cyber Security Centre has received more than 30,000 cyber incident reports, twice as many as in the same period last year. It is even worse for phishing attempts with 5536 reports.
Cybercriminals want your personal information and your money. Most of the time, as a customer of any service, you will be on the frontline and alone in the initial traps set by Cybercriminals. While Alpian can help you remediate some situations, it’s definitely better to remain safe firsthand.
What do they want from you and what can you do to protect yourself?
Navigating this so-called red ocean full of sharks as safely as possible is a tedious challenge. Here are 4 general principles:
Do not share your personal data (login details, one-time passcodes (OTP), or online banking information such as card PIN, CVV, or account information). They are yours and should remain private.
Do not trust unverified applications (mobile, desktop, or web browser extensions).
Stay clear of anything suspicious or utterly appealing (suspicious money schemes, suspicious links, unknown attachments).
Do not interact with your bank in unofficial ways (use the official website, the official mobile application, and do not grant access to your computer).
Each bank has a unique way of operating. That's why we are kicking off a series of mini publications. Our first article, "Alpian will never ask that!" will focus on the protection of your personal information and reminds you how to engage with our Banking Specialists and Wealth Managers. Stay tuned!
Our Referral Rally is on!
Have you explored our attractive referral program yet? And did you know we have even better rewards only until June 10th?
Invite your friends and family to join Alpian, and you won’t only earn CHF 100 for each successful referral, but you can double your rewards if you’re one of the top referrers. It's quick and effortless!
Just head to your profile section and find all the details under “Refer a Friend.” Start sharing the benefits of Alpian today!
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