Stock Market Monitor

  • Helen Jewell

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Key points


A broader market leadership?

We believe equity market momentum can continue into the second quarter of the year – although returns may be more muted and across a broader section of the market.


Opportunities in Europe and Japan

Markets in Europe and Japan have hit record highs. We believe rewards are still on offer for active stock pickers.


An exciting time for smaller companies

Potential interest rate cuts could act as a catalyst for smaller companies to bounce back from depressed valuations, in our view.

Equity market momentum to continue?

At BlackRock Fundamental Equities, we expect the environment to remain supportive for stocks in coming months, but the leaders may come from a broader section of the market. Inflation across developed markets has been on a downward trend, and this should give central banks the ability to cut interest rates. This would be positive for equities, in our view. However, we don’t see a return to the “cheap money” era that followed the Global Financial Crisis (GFC), and we believe this will lead to a greater gap between the stock market winners and losers in a more alpha-centric investment regime.

Technology-related stocks globally have led the way in 2024 – and for good reason. Some of these companies have delivered extremely strong earnings, powered by the mega force of digital disruption and artificial intelligence (AI). Yet valuations for these companies are lofty. We believe potential rate cuts could lead momentum to broaden out to areas of the market that are cheaper, and also home to quality companies with attractive long-term earnings growth potential.

A broader set of opportunities

MSCI World Small Cap vs. MSCI World, 1998-2024

Index performance returns do not reflect any management fees, transaction costs or expenses. Indices are unmanaged and one cannot invest directly in an index. The figures shown relate to past performance. Past performance is not a reliable indicator of current or future results. Source: Data from Ken French and Federal Reserve Economic Data, November 2023. Note: the chart shows the average next-12-month global equity returns during different interest rate environments, 1975-2022. Global equities are represented by MSCI World and returns are shown in value weighted dollar terms.

Three reasons to consider Europe…

Governments are spending big on multi-decade projects such as decarbonization and supply-chain security. We believe this can help provide earnings resilience to a range of companies across sectors.

… and three reasons to explore Japan

We aim to unearth the next round of winners from technological innovations such as Artificial Intelligence and weight loss drugs – while avoiding those businesses that face disruption.

Marshalling the mega forces

We seek companies with the ability to grow in an environment of lower economic growth. Quality companies may also be in a position to return cash to shareholders through dividends and buybacks.

Is now the time for smaller companies?

Attractive valuations can be found beyond traditional “value” sectors, in our view. Cyclical valuation pullbacks and regional discounts may mean that some quality companies come at a reasonable price.

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Risk warnings

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

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