Market Update January 2024: A Strong Start to the Year

• January Kicks Off Excellently
• American Economy Robust
• Expected Timing of Interest Rate Cuts Revised

January Kicks Off Excellently

The positive trend from late 2023 continues into January: once again, the Peaks portfolios saw an increase in value. The significant difference this time around is that it was the stocks that rose. Bonds had a less favourable month as investors anticipate a decrease in interest rates this year. How exactly this works will be explained later in this article.

Table 1: Net returns of the Peaks portfolios

Peaks portfolio	January	2024	Average yearly return since start of Peaks	Total return since start of Peaks
Cautious	0.2%	0.2%	2.2%	14.0%
Balanced	0.7%	0.7%	4.3%	29.1%
Ambitious	1.2%	1.2%	6.5%	45.8%
Adventurous	1.7%	1.7%	8.6%	63.6%

Good to know: These are the net returns of the Peaks portfolios for the previous month, the year-to-date, and since the start of Peaks, after deducting Peaks’ fees, fund costs, and transaction costs. The value of your investment may fluctuate. Past performance is not indicative of future results.

The table above shows returns for a portfolio of €10,000. The returns do not take into account any deposits or withdrawals made during the month. If you have deposited or withdrawn money this month, your personal return will differ from the figures shown above. Additionally, your personal return will vary if you have invested less or more than €10,000 due to the monthly fixed costs charged by Peaks.

 Table 2: Risk of the four Peaks portfolios

Risk (volatility)	January	2024	Average annualized volatility since start of Peaks
Cautious	4.4%	4.4%	5.7%
Balanced	5.0%	5.0%	7.6%
Ambitious	5.9%	5.9%	9.9%
Adventurous	7.1%	7.1%	12.4%

Good to know: Here you can see the risk of the four Peaks portfolios over different time periods (last month, year-to-date, and average since the start of Peaks). Risk represents the annualized fluctuation in return and is also referred to as "volatility.". Risk is measured by calculating the standard deviation of the daily net returns of the Peaks portfolios and converting that number to an annual basis.

American Economy Robust

January saw the release of numerous economic figures in the United States, and overall, they were favourable. Consumer sentiment is positive, reflected in their spending, with retail sales surpassing expectations. Additionally, unemployment remained low. In fact, January saw nearly twice as many new jobs added as analysts had predicted, totaling 335,000. Producers also express positivity, particularly regarding the influx of new orders.

Europe is performing reasonably well too, but not as impressively as the United States. Consumer confidence dipped slightly in January, possibly due to the conflicts in Ukraine and Israel, which are closer to European consumers than to Americans.

Overall, the figures were encouraging, leading to further increases in stock prices, particularly in technology stocks. In the United States, the renowned S&P 500 index recovered from the declines of 2022, setting new records.

Expected Timing of Interest Rate Cuts Revised

In December, investors anticipated central banks such as the American Federal Reserve (FED) and the European Central Bank (ECB) to lower interest rates in 2024—a move beneficial to the economy. The question was when. The prevailing sentiment was the sooner, the better for the economy and stock prices.

However, the robust economic figures have reduced the urgency to lower interest rates. Labour market tightness and rising wage costs are contributing factors, leading to higher prices for goods (noticeable in everyday shopping) and persistent high inflation. In January, the major central banks left interest rates unchanged, with the US central bank indicating that the earlier expected initial rate cut in March is not the bank's base scenario. This news had little effect on stock markets but led to a slight decline in bond markets, as indicated in the table below.

Table 3: Net yields of the index funds included in the Peaks portfolios

Stocks	ISIN	January	2024	Return since start of Peaks
North America	LU0629460089	3.0%	3.0%	125.5%
Europe	IE00B52VJ196	2.2%	2.2%	61.1%
Asia Pacific	LU0629460832	2.3%	2.3%	29.9%
Emerging markets	IE00BYVJRP78	-3.8%	-3.8%	6.8%
Bonds
European Government bonds	IE00B4WXJJ64	-0.6%	-0.6%	-4.9%
European Corporate bonds	LU0484968812	-0.1%	-0.1%	-4.6%

Good to know: These are net yields of the index funds in which you invest with Peaks in January 2024, for the entire year 2024, and since the start of Peaks, after deducting Peaks costs, fund costs, and transaction costs. The value of your investment may fluctuate. Past performance is not indicative of future results.

Investing always involves risks. Know that you could lose (a part of) your invested money.