Investment Monthly: Fed rate cut and a US soft-landing outlook support sentiment

Key takeaways

The Fed rate cut and its forecast of no recession support market sentiment. We now expect two more 0.25% rate cuts this year. Historically, quality bonds and equities continue to rally further after the first cut. We continue to favour Global and US equities and investment grade with 5-7 year maturities. Fed rate cuts should give more scope for EM central banks to cut rates, so we move EM local currency bonds up to neutral, preferring India and Indonesia.

China’s new stimulus package brings tactical opportunities but more significant fiscal easing is needed for sustainable growth. The supply chain reorientation, the global rate cut cycle and any pick-up in sentiment in the region should benefit ASEAN markets. We therefore upgrade Singapore stocks to overweight.

We continue to broaden and balance our sector exposure in the US, favouring technology, industrials, communications, financials and healthcare. As a result of rate cuts, we upgrade Global and European utilities to overweight, which should benefit from lower borrowing costs and rising electricity demand. Both communications and real estate are rate-sensitive sectors. We upgrade European communications to neutral due to strong EPS growth expectations, which leads to an overweight position globally. We also move Asian real estate up to neutral.

https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/2024-10/

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Publish Date: Mon, 30 Sep 2024, 12:02 PM

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