October 2024 Market Trends

How do you plan to ride through November? Are you the type to cozy up at home, or are you inclined to go out and celebrate, leaving behind the grey skies of autumn?

We’re more of the latter. First, because as entrepreneurs, it’s in our nature to stay in motion, always striving to bring you the best. Second, because turning up the volume sometimes helps us cut through the noise of the markets. And there is noise, as you’ll see in our “Market at a Glance” section.

This autumn, we also have plenty to celebrate. Thousands of new clients have placed their trust in our services. The recent launch of our new ETF savings plans, Managed by Alpian Essentials, has been a success, with strong adoption. We’ve also announced an exciting new partnership with Resolve for mortgage solutions, expanding our offerings—and there’s more to come!

Our goal is to close the year on a high note, like the markets (although we’re confident we stand a better chance) and to keep delivering more for you.

Happy reading!

The market at a glance: Same old song and dance

They say music soothes the soul. I can’t say for certain if it has the same effect on the markets, but this month, I feel like turning up the volume to temper their mercurial moods. I’ve chosen Aerosmith’s classic “Same Old Song and Dance” to accompany this review.

I’ll save a softer melody for another time, I promise, but nothing seemed more fitting to capture the cyclical pattern gripping the markets over the past two years. “Central banks—ouch, ouch, ouch. Economic indicators—everything’s off. Earnings season—here we go again.” Quarter after quarter, this tune keeps replaying. And we, as investors, have no choice but to keep dancing. The night is indeed wearing on, yet the markets continue their upward sway. So, let’s dive into what October brought.

Key takeaways

History doesn’t repeat itself, but investors often do, especially lately. Their actions feel like a familiar tune, with markets trading sideways—which isn’t necessarily a bad thing.
Equity markets saw a mixed October: the U.S. eked out slight gains, while European markets faltered, and China lost momentum after a brief September boost.
Bond markets were lively, with rates bouncing unpredictably amid a standoff between central banks and bond investors on future rate direction.
Commodity markets remained steady, Gold continued its strength, outperforming equities amid uncertainty.
Cryptocurrencies showed renewed interest, with hints of vitality amid a relatively calm year.

What happened with equities

In the equity market, the dance floor barely warmed up in October. The U.S. market, always the life of the party, managed to eke out a few basis points, while the Swiss market and the Japanese markets barely kept pace, and the European Markets stumbled.

Meanwhile, the Chinese market seemed content to stay at the bar. After a liquidity boost in September sparked a brief revival, it now appears to be slipping back into its familiar patterns (at least from a Western investor’s point of view).

Explaining market movements when they’re happening is challenging enough (index movements result from millions of interactions among market players, many driven by algorithms, though the headlines always try to make sense of them). But when nothing’s happening... I feel the urge to turn up the volume again!

On a more serious note, if the equity markets lacked action, it’s because the news lacked news. Rate cuts are still anticipated, but liquidity isn’t drying up. Earnings reported by companies were slightly less impressive but not surprising. Economic data has offered little to bolster either optimistic forecasters or recession prophets. Even on the U.S. election front, it all feels like a rerun.

Thankfully, American banks, all of which posted profits for Q3 2024, added a bit of spice by predicting a bleak future for the equity market. As always, forecasts, even from the best analysts, should be taken with a pinch of salt.

What happened with bonds

For a bit of excitement, we turned to the bond markets (who would’ve thought!). Rates went up—or wait, did they go down? It all depends on your perspective, whether you’re looking at short-term or long-term rates. The bluffing game between bond managers and central bankers is still in full swing. As a reminder while central bankers set short-term interest rates (the rates at which banks refinance themselves on the short term, and more or less what we get on our cash and saving accounts from one quarter to another), longer-term interest rates are set up but the forces of the markets, i.e. supply and demand (for example if the government or a company wants to borrow for 10 years). In essence, short-term rates are anchored by current monetary policy, while long-term rates reflect broader expectations about the future. And the central banks and the markets seem to have divergent views on the economy and where rates should be.

At the start of the year, central banks hinted they’d be cautious with rate changes, while the bond market expected six rate cuts. Now that central banks suggest we’re still well above what they consider “neutral” interest rates, the market is shifting its expectations in the opposite direction.

It seems the “bond vigilantes”—bond investors who push back against government policies they see as harmful—are now acting more like union negotiators, trying to influence rates to their advantage.

What happened with commodities, currencies, and digital assets

Periods when markets drift and investors circle are just as vital as those with clear direction.

First, they signal a period of deep digestion— A financial ecosystem that takes time to process information is a healthy sign, far better than rushing to allocate capital into less efficient areas of the market, which ultimately leads to financial bubbles and market turmoil.

Second, these phases allow us, as investors, to reassess our strategies. Finally, when the major markets offer limited prospects, they encourage us to explore other parts of the ecosystem, searching for good deals or new signals.

Commodity markets, reflecting global demand and acting as a geopolitical barometer, are a good example. Their stability in October is reassuring. Or take the resilience of gold, thriving on uncertainty and outperforming the stock market since the start of the year. Or the renewed vitality of cryptocurrencies, which deserves our attention. Until we uncover the identity of Bitcoin’s creator, Satoshi, we can count on Trump to push the price higher.

True, asset classes have tended to re-correlate lately (moving more in sync), but there are still plenty of yield sources and valuable pockets to build structurally diversified portfolios. And that’s good for investors. The same old song—whether that of the markets or Aerosmith, you choose—will likely accompany us for the coming months, but at least we can dance to multiple beats.

Demystification room: AI and Big Tech: Are valuations really in line with the promises?

Since the launch of ChatGPT in November 2022, Silicon Valley has made a powerful comeback, promising that AI will revolutionise our lives and boost productivity.

The numbers are staggering: in less than two years, Alphabet, Amazon, Apple, Meta, Microsoft, and Nvidia have collectively gained over $8 trillion in market value. Yet the question remains: are these valuations truly justified by AI’s impact on our lives?

Big tech and user trust

Technology has transformed our daily lives through computers, smartphones, and the internet. However, trust in tech giants is dwindling; in 2024, only 27% of Americans still trust them (Gallup). Concerns over algorithms' impact on mental health or Amazon's pressure on small businesses have heightened public skepticism. Big Tech’s grand promises are struggling to win over an increasingly wary audience.

AI Unicorns: Valuations and uncertainties

In the AI sector, valuations are dizzying. ChatGPT is valued at $157 billion, Anthropic at $18 billion, and Perplexity at $8 billion—figures rivaling major companies like Nestlé. Yet the economic models of these players remain unclear, echoing the dot-com bubble era, where speculation soared despite a lack of concrete profits. Will AI be a lasting revolution, or will these valuations eventually collapse?

Regulation: Europe leading, the U.S. falling behind

On the regulatory front, the U.S. allows tech giants to self-regulate, offering only voluntary recommendations. Europe, however, is taking a stricter approach. The Digital Markets Act and the Digital Services Act already impose limits on large companies, and the AI Act, expected in 2025, will establish specific rules for AI. Europe is leading efforts to prevent potential issues.

AI: A revolution for everyone?

Tech giants are betting on a future where AI is omnipresent, from virtual assistants to automated recommendations. But does this revolution genuinely benefit everyone, or mainly the Big Five?

Big tech in S&P 500

While AI promises to improve our lives, it will require transparency and effective regulation to ensure shared benefits. For now, AI remains a dazzling promise, but its true impact has yet to be confirmed.

Alpian’s insights: How are our clients invested?

It’s been one month since we launched Managed by Alpian Essentials, our ETF savings plan available starting from 2,000 CHF, and it’s already a success. But which plan are clients choosing most, and why?

The Global plan has proven most popular, with 71% of clients selecting it, followed by the Swiss plan, chosen by 16%. This reflects our clients’ international outlook and their desire to capture growth from various global economies. For clients with a more aggressive profile, 70% have opted for the Global + Crypto plan, highlighting a strong interest in including digital assets as part of a diversified portfolio. Our Sustainable plans have also attracted interest, appealing to those who seek global diversification while supporting companies that prioritise sustainable practices.

ETF savings plans Alpian And you—how would you shape your investment journey with us? For more information about our ETF savings plans, Managed by Alpian Essentials, explore our website or schedule a call with one of our advisors.

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