Quarterly market update: September 2024

Heated summer months

This year's stock market summer will go down as one of the most turbulent seasons in financial history. 

After strong growth in the first half of 2024, global stock markets hit a tumultuous phase.

In early August, a weaker-than-expected U.S. jobs report for July triggered a sharp, temporary decline. Many large U.S. tech companies – such as Alphabet, Apple, Amazon, Nvidia, and Tesla – felt the pressure, leading to a drop from their recent highs. 

In recent weeks, stock markets have recovered most of these losses, supported by signals from the U.S. Central Bank to cut interest rates. 

Particularly bond markets, (especially government bonds), have gained when interest rates are expected to drop.

Investments in gold also played a crucial role in stabilising portfolios during this period. The price of gold reached a new all-time high.

What does it mean for investors?

After the dust has settled, a long-term investor should continue to focus on a few key developments. 

• Stock markets have generally traded higher since the beginning of June, reflecting a positive trend. 
• Interest rates have decreased, with the U.S. 10-year yield falling from 4.5% to 3.84%, which has improved the prices of bonds.
• Gold is trading near its all-time high, supporting its role as a stabilising part of many Selma portfolios. 

Hence, as a long-term investor, one should not get distracted by the short-term ups and downs in the markets. Keep your eyes on your long-term plan!

Gold price still on an all-time high

The yellow metal has surged due to the prospect of lower US interest rates, with the US Federal Reserve widely expected to cut rates soon. 

Central banks have also been buying more gold, especially in Eastern and Asian countries like China, which has assisted in raising the price.

Entering a new interest rate era

For the first time in two years, the U.S. Central Bank has announced that the time for interest rate cuts has come. This is in response to slower economic growth and cooling inflation. Markets have reacted positively to this news.

Global conflicts keep uncertainty high

Political conflicts around the world, including the ongoing war in Ukraine and the escalating tensions in the Middle East, continue to keep uncertainty high. This geopolitical instability is expected to contribute to increased market volatility throughout the rest of 2024.

So, even despite the current positive situation, it is important to remember that markets will always go up and down in the short-term.

Selma's Quarterly market update and rebalancing

Rebalancing refers to keeping your portfolio in line with your long-term strategy. Markets move each of your investments differently which can result in your portfolio being "out of balance".

In response to slightly more expensive market valuations – especially in the U.S., Emerging Markets, and Switzerland – Selma is making slight adjustments. 

This includes shifting some investments from stock markets and slightly increasing the precious metals share of your portfolio. 

Selma reviews whether any changes are needed to enhance the stability of your portfolio. If adjustments are necessary, they will be implemented during the next scheduled transactions to avoid unnecessary trading.

What this means for you

Keep your eye on the long run

While Selma helps you manage risk, it's essential to stay focused on your long-term goals. Markets can have their ups and downs. Try to keep a cool head and avoid getting distracted by short-term market fluctuations.

Broad diversification continues to pay off

In times of high uncertainty, when it’s unclear which markets will recover the fastest, the broad diversification of your globally diversified portfolio remains a key advantage. It helps you spread risk and positions you for future growth.

Stick to your plan and invest regularly

Regular investing, also known as Dollar-Cost-Averaging, is a good strategy to reduce risk and stay on track with your financial goals, even when markets rise and dip quickly. 

By investing consistently, you can take advantage of lower market prices, buying at a discount, and setting yourself up for long-term success. 

For further information, you can always check out your Selma mobile deposit plan and get more helpful insight from the Selma AI advice feature.

Remember: These changes only affect Selma's investment accounts. Pillar 3a accounts will not be adjusted based on this assessment.