‘Not much downside’ amid markets seeing record-breaking rallies


"There's not much downside in the markets at the moment," comments the CEO of one of the world's largest independent financial advisory and asset management organisations as global stock markets continue their upward trajectory.


Nigel Green of deVere Group is weighing in as the S&P 500 has reached its 30th all-time high this year, driven primarily by robust performances in the tech sector. 


This rally has not been confined to the US, as Asian and European markets have also posted significant gains, buoyed by strong investor confidence and positive sentiment.


He says: "Investors are increasingly making decisions based on the solid fundamentals of companies, particularly those in tech.


"This is a sensible approach, given that many of these firms have demonstrated strong profitability and resilience, even in times of economic uncertainty."


The recent performance of Asian chip stocks exemplifies this trend. 


These stocks have been among the top contributors to regional gains, reflecting the sector's critical role in the global economy and its ability to thrive amidst various market conditions. This sector's growth underscores the broader risk-on mood that is also lifting European equities.


"The tech sector, especially, has proven to be a cornerstone of market strength," Green continues. 


"Even if we were to experience a major economic slowdown, many of these tech giants are well-positioned to continue delivering profits. Their business models are built on innovation, scalability, and global reach, which provide a buffer against potential downturns."


The deVere Group CEO also highlights a crucial factor that underpins the current market rally: the strategic posture of central banks. 


"Markets are well aware that central banks are poised to cut rates if there's a slowdown. This backstop provides a layer of confidence, reducing perceived downside risks."


The willingness of central banks to act as a safety net for the economy plays a significant role in sustaining investor optimism. 


"The anticipation of potential rate cuts ensures that liquidity remains ample, which in turn supports asset prices across the board.


"This interplay between robust corporate fundamentals and supportive central bank policies creates a favourable environment for equities," he explains. 


"Investors recognise that they are operating in a landscape where the odds of severe market corrections are mitigated by proactive monetary measures."


As such, "there's not much downside in the markets at the moment."


However, the deVere chief caveats the optimism with, "but the danger is always what we don't know, not what we do."


Nigel Green's commentary reflects a broader sentiment within the investment community that the current market conditions are conducive to sustained growth. 


The focus on companies' earnings, balance sheets, and growth prospects has shifted the narrative from short-term interest rate speculation to long-term value creation.


"We're seeing an important shift where market participants are less swayed by the day-to-day movements in interest rates and more by the intrinsic value of their investments. 


"This is a healthy development for the markets, as it encourages a more strategic and less reactive approach to investing."


He concludes: "The combination of strong corporate fundamentals, particularly within the tech sector, and the willingness of central banks to step in should there be a downturn, creates a landscape with limited downside at the moment."

Facebook
Twitter
LinkedIn
Email
WhatsApp

Tell Me More