Market Commentary 3rd Quarter 2024
The third quarter of 2024 was a relatively volatile one in financial markets. The stock market losses at the beginning of August indicated that some investors no longer fully trusted the positive sentiment that had prevailed over the previous months.
Business Activity and Global Economy
The third quarter of 2024 was a relatively volatile one in financial markets. The stock market losses at the beginning of August indicated that some investors no longer fully trusted the positive sentiment that had prevailed over the previous months. In particular, the momentum among technology companies slowed after they presented their quarterly earnings. Although most of these companies continued to post high profits and growth, their results fell somewhat short of market expectations and, in some cases, also analyst expectations.
At the same time, inflation in the eurozone and the USA fell noticeably, while slightly fewer new jobs were created, indicating a cooling of the economy. The mood among companies in the manufacturing sector also remained gloomy, as can be seen from the purchasing manager surveys, whereas business in the service sector was robust and even reached a multi-month high in the USA. In this difficult environment, the chair of the US Federal Reserve (Fed), Jerome Powell, expressed his optimism about upcoming interest rate cuts at the meeting in Jackson Hole, which caused bond yields to fall further. The US Fed then followed through on its announcements with a double rate cut in September, while the European Central Bank (ECB) decided to cut rates by a quarter of a percent. The Swiss National Bank (SNB) followed suit at the end of the month with an equal reduction of 0.25%.
Headlines in the third quarter were increasingly dominated by extreme political and economic events. Following the attempted assassination of US presidential candidate Donald Trump in July, European car stocks and American tech companies with production facilities outside the US lost ground as the markets deemed a second Trump presidency more likely. This trend was partially reversed with the nomination of Kamala Harris shortly afterwards. The tensions in the Middle East continue to weigh on the global markets, as a further escalation would put additional pressure on supply chains and could also cause the oil price to rise, which in turn would have consequences for inflation and therefore interest rate cuts. The failed update by cybersecurity company Cloudstrike contributed to the prevailing feeling of uncertainty and caused worldwide business disruptions in July.