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The market at a glance: Let it rain!
Autumn is here, and while we watch the rain falling outside, there’s something else pouring down on the markets: liquidity! But is this a good sign? We’ll explore this in our “Market at a Glance” section.
What is definitely good news is that Alpian is celebrating 2 years of banking and growth with you—something we’re incredibly proud of. We have plenty of reasons to mark this occasion, starting with:
Our continued promise to support your financial growth with unchanged interest rates.
The launch of our new investment service, Managed by Alpian Essentials, which lets you start an ETF savings plan with just CHF 2,000.
As always, we’re here to help you grow your wealth, rain or shine.
Happy reading—and here’s to many more years of financial growth together!
The market at a glance: Let it rain!
September is bound to be a month to remember. For many investors, the past few years have felt like wandering through a desert, parched and searching for drops of liquidity as central banks played the part of the merciless sun.
And then—hallelujah—the rain came. It’s almost as if the central bankers finally heard our prayers and decided to play gods, showering us with interest rate cuts. And they weren’t alone; governments joined the party, making it rain stimulus programs like there’s no tomorrow. So, as a fitting tribute to this newfound generosity and abundant liquidity, we’ve picked Eric Clapton’s 1970 classic "Let It Rain" to set the mood for our newsletter.
So, let it rain! After all, liquidity is the invisible tide driving global markets, right? The ease with which money flows through institutions—central banks, commercial banks, and into the broader economy—affects everything from stock prices to economic stability. At least, that’s what the textbooks say.
But wait...
Was liquidity really missing these past months? Liquidity isn't just about interest rates. From a broader perspective, it’s clear that it had been already improving throughout the year. Also is this sudden abundance truly a good omen?
We’ll try to answer these questions, but first, let’s review how the markets reacted to the flood of good news.
Key takeaways
Central banks and governments saw central banks and governments delivering interest rate cuts and stimulus packages, creating a “liquidity rain” across financial systems.
Global equity markets showed mixed reactions: U.S. and European markets were slightly up, while Switzerland and Japan declined, but China surged with a notable 17.5% increase.
Bond markets welcomed the liquidity, with global bond markets rising by 1.2% this month.
Commodities markets experienced fluctuations: gold shined, oil slipped, and the Swiss franc strengthened, pressuring exporters.
Cryptocurrency markets remained stagnant, trading within the same range for the past six months.
What happened with equities
“We heard you!” said the central banks, to which the equity markets seemed to respond, “Not quite.” Looking at global equity market performance in September, it’s clear that interest rate cuts didn’t inspire the excitement many had hoped for.
In the U.S., stocks are up just 2.0%—hardly a sign of euphoria. The story is similar in Europe (+0.9%), while markets in Switzerland and Japan even slipped into negative territory (-2.2% and -1.9%, respectively). So, why the muted reaction?
First, let’s set the record straight—central banks don’t exactly have a conversation with the markets. They operate on their own agenda: keep the economy in balance, neither too hot nor too cold, and maintain inflation in check. While they aim to ensure that markets function efficiently, it’s not their job to drive stocks up in a straight line or deliver endless returns to investors (sorry, Nvidia shareholders).
Second, while central banks play a critical role by providing liquidity and making capital accessible, they aren’t here to fix all market woes. They can't repair failing companies, revive sluggish industries, or resolve geopolitical tensions.
September may have gotten off on the wrong foot, and central bank announcements did provide some upward momentum, but other issues weighed heavily on investors’ minds: a more fragile U.S. job market than it appears, the European auto industry teetering on the brink of collapse alongside political upheavals, uncertainty in Japan’s political landscape, and perhaps most concerning, the escalation of tensions in the Middle East.
The notable exception was China, where markets soared by 17.5% this month. It’s not every day you see an extraordinary stimulus package, and the government certainly didn’t hold back: a 0.5% rate cut, government loans to local authorities to revive the real estate sector, and a $113 billion boost to equity markets. It’s a strong reminder that China’s markets and economy are not something you can easily analyse through a Western lens.
And not far away, Thailand unveiled a $14 billion handout scheme. Is it time to take another look at emerging markets? At least international diversification is paying off—something we strongly advocate for.
What happened with bonds
On the bond market side, the “money rain” was certainly more welcome. Global bond markets are up 1.2% this month. Of course, there is a much more direct (inverse) link between interest rates cut and bond prices. So, when the Federal Reserve, the European Central Bank, the PBOC, and the Swiss National Bank deliver rate cuts within weeks, fixed-income investors have every reason to rejoice. As you know, lower rates benefit borrowers but not savers, and they also mean future bond issuances will come with less attractive yields.
While these changes are positive for now, it’s important to pay attention to what central banks are signalling. The recent conference by the SNB is a prime example. The official reason for the 0.25% rate cut was lower-than-expected inflation, driven by decreases in oil and electricity prices and a stronger Swiss franc.
However, the stronger franc is a double-edged sword—it could impact price stability and potentially the SNB’s balance sheet, which holds a large reserve of foreign currencies. Despite overall solid growth in the Swiss economy during the second quarter, not all sectors performed equally, and unemployment saw a slight rise.
The SNB also highlighted weaknesses in the mortgage and real estate markets, which are crucial for the health of the Swiss economy.
In summary, this is not exactly the brightest outlook and the SNB has hinted that more rate cuts might be necessary in the coming months to keep prices stable.
What happened with commodities, currencies, and digital assets
Commodity markets seemed to lean toward the gloomier side of the liquidity rainstorm. Gold prices went up, while oil took a hit, dropping nearly 9%, signalling plenty of supply but not enough demand. Since oil keeps modern economies running, lower demand can say a lot about their health.
On the currency front, the Swiss franc kept gaining ground against the dollar, adding pressure on certain industries. Watchmakers, in particular, are urging the SNB to step in, as exports have started to dip.
Finally, on the digital side of markets, cryptocurrencies continue to fluctuate within the same range they've been trading for the past six months. It’s like the rain has turned into mud.
In conclusion, while central banks and government actions have been positive for markets, the outlook remains uneven across the globe. If tensions continue to rise in the Middle East, investors will likely have more to worry about.
In times like these, diversification is crucial, as crises rarely hit every region simultaneously. And as we navigate through potential market turbulence, relying on a mix of asset classes to mitigate equity risks is a strategy we actively leverage. So, as we listen to Clapton's "Let It Rain," let’s enjoy the current downpour of liquidity—just remember, if it turns into a storm of bad news, it pays to be prepared.
Demystification room: How interest rates quietly shape our decisions
You've probably heard about interest rates lately, especially with central bank policies in the spotlight.
Interest rates, though seemingly technical, directly affect our lives. They act as a “nudge,” subtly shaping our decisions. How?
Interest rates: A push to spend or save
When interest rates are low (say 0.1%), there's little incentive to save, so we tend to spend more. But if rates rise to 2%, saving becomes more appealing. That’s how the Swiss National Bank (SNB) encourages spending or saving—low rates boost spending, while high rates make saving attractive.
Buying on credit: How rates affect us
Low mortgage rates (around 1.5%) prompted many Swiss to buy homes, but rising rates (to 3% or more) can make mortgages costlier, discouraging property purchases.
Investing: How rates shape choices
The SNB’s recent cut from 2% to 1% makes traditional savings less rewarding, pushing investors toward riskier assets like real estate or stocks. Conversely, if rates rise to 3%, bonds and safer investments become more attractive.
A subtle yet powerful influence
Interest rates, whether rising or falling, shape our spending, saving, and investing habits without us always noticing. They are a hidden force that influences our financial decisions, day by day.
Alpian news: More for your wealth in October
Autumn is typically a time when we have more space to reflect on our finances—while our wallets recover from summer spending and prepare for the year-end festive season. That’s why we’ve decided to give your wealth a boost:
Competitive interest rates
While the Swiss National Bank cut interest rates and most banks followed suit, we’re keeping our rates unchanged: 1% on CHF for full account balances over CHF 100,000 (0.75% otherwise), 1% on EUR for balances up to EUR 500,000, and 1% on USD for balances up to USD 100,000. And remember, we pay interest monthly, so you don’t have to wait until the end of the year to enjoy the benefits.
Introducing "Managed by Alpian Essentials"
We’re excited to launch our new investment offering—Managed by Alpian Essentials—a suite of ETF plans designed to help you grow your wealth over the long term, available from just CHF 2,000. Our ETF plans come in a range of options to suit all types of investors: whether you have a global outlook, prioritise sustainability and ethical practices, or want exposure to both traditional and digital assets. Plus, our solutions come with a fair price tag—at 0.75%, they’re on average 40% cheaper than those of traditional banks, without compromising on quality. And the best part? Our investment team manages everything for you.
Two great reasons to optimise your finances!
SHEWEALTH Collective: Second screening of Show Her The Money
Due to popular demand, we’re thrilled to announce a second screening of the award-winning documentary Show Her The Money in Zürich on October 31st, 2024!
This film highlights the urgent issue of women receiving less than 2% of venture capital funding. We will have a packed evening with the screening, a panel discussion featuring Azin Radsan van Alebeek, Co-Founder and General Partner at Emmeline Ventures, and Olga Miler, Founder and CEO of SmartPurse, followed by an apero and networking.
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