February 2024 | Monthly Economic Update
2024 kicked off the year with mixed performance. Performance was driven by strong economic results in developed markets, causing renewed sentiment of higher interest rates for longer. US equities performed best among major regions in January with a gain of 1.7%, followed by international developed equities with a weaker but still positive 0.6% return. Conversely, emerging market equities saw negative returns and were one of the worst performers across all asset classes for the month, falling 4.6%. Emerging markets were led lower by China, falling 10.6% on continuing weak growth from 2023.
Sector performance in the US similarly saw mixed results. Communication Services and Information Technology were the top performers, gaining about 5% and 4%, respectively, as larger, grow thier areas of the market generally outperformed their small and value counterparts. Notable underperformers were Real Estate, declining 4.7%, and Consumer Discretionary, falling
3.5%. Real Estate was impacted as markets reacted to the Fed’s more hawkish monetary policy stance and Consumer
Discretionary was pulled down by Tesla, a top constituent in the index, with its share price falling over 20% in January.
Fixed income struggled to start the year, with US, international, and emerging market bond indices all finishing in negative territory. Bond yields rose as markets re–priced expectations for interest rate cuts in 2024, given strong economic growth and the hawkish Fed. Short–term, quality bonds were favored, while longer–term and municipal bonds declined.
Commodities declined in January, with the broad index falling 0.9%. Energy saw gains with oil prices increasing as a result of
global supply uncertainty with rising tensions in the Middle East and the ongoing war in Russia–Ukraine. Precious metals were
negative as the US Dollar gained, and inflation results were subdued.
Traditional balanced portfolios were in the negative to start the year, with the global 60/40 index down 0.2%. Equities were the lone positive performer, adding to performance the more US–weighted you were, while bonds, REITs, commodities, and gold
detracted from returns.
The Monthly Riddle
What 3 positive numbers give the same result when multiplied and added together?
LAST MONTH’S RIDDLE: What’s right and never wrong?
ANSWER: Right angle.
Tip of The Month
Consider scheduling a consultation with your financial advisor early in the year. This can be a helpful step in assessing your financial situation and exploring potential goals for the 2024.
This is for informational purposes only, is not a solicitation, and should not be considered investment, legal or tax advice. The information has been drawn from sources believed to be reliable, but its accuracy is not guaranteed, and is subject to change. Investors seeking more information should contact their financial advisor. Financial advisors may seek more information by contacting AssetMark at 800-664-5345.
Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio. No investment strategy, such as asset allocation, can guarantee a profit or protect against loss. Actual client results will vary based on investment selection, timing, market conditions, and tax situation.
It is not possible to invest directly in an index. Indexes are unmanaged, do not incur management fees, costs and expenses and cannot be invested in directly. Index performance assumes the reinvestment of dividends.
Investments in equities, bonds, options, and other securities, whether held individually or through mutual funds and exchange traded funds, can decline significantly in response to adverse market conditions, company-specific events, changes in exchange rates, and domestic, international, economic, and political developments.
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