SUMMARY
- China led the way in Q3 after a huge rally in the final week.
- US Value and International outpaced US Growth.
- Weak US dollar improved developed international returns.
Quarterly Recap: Fed Rate Cut and Chinese Stimulus Take the Spotlight
The third quarter of 2024 culminated a year-long ‘pivot’ from the Federal Reserve (‘the Fed’). After quarters of speculation, the Fed surprised markets with a 50-basis point (basis point = 1/100th of a percent) cut, double what the market was expecting. As the Fed began their cutting in earnest, markets reacted with a bit of a ‘value’ rotation (as can be seen in both US Sector returns and International Returns).
This entire quarterly market recap may have been focused solely on the Fed, if not for the People's Bank of China (PBOC) announcing stimulus to help their ailing economy. In a single week, Chinese equities returned 21.2%, catapulting them, and thus emerging markets to the top of asset class returns for the quarter as shown in Table 1, below. With both Fed and PBOC stimulus, we believe it is important to look at the market’s reaction to determine where we expect things to shake out further.
