Monthly Market Review - January 2024
Wealth Digest: Monthly Market Review (January)
Global markets took a pause in January after a very strong finish witnessed to 2023, especially in Nov-Dec of last year. While markets initially witnessed some profit taking as signs of an early Fed-rate cut faded, they generally recovered by the end of the month. Economic trajectory and Fed policy remained unclear, while the biggest story for the month was the trade disruptions induced by heightened tensions in the Red Sea. The MSCI World Islamic Index inched lower, ending January down 0.35%. Similarly, the Dow Jones Sukuk Index opened the year slightly down by 0.4%.
In the first 2024 monetary policy meeting, the Fed maintained a neutral tone ruling out any further rate hikes while maintaining the previously signaled possibility of rate cuts in the near future. However, despite optimism about the economy and easing inflation, Chairman Powell rejected the possibility of a rate cut as early as their next meeting in March and emphasized data dependence, slowing down any decision-making 'rush.' The Fed’s dot plot which summarizes their outlook, projects three 2024 rate cuts and seven more through 2026. Bond markets, cautious given the Fed's tone, nudged US 10-year Treasury yields up from 3.86% to 3.96% by month-end.
In the broader U.S. economy, the prospect of a 'Goldilock Period' continued to gain momentum. The labor market maintained full employment, with the December unemployment rate holding steady at 3.7%. The economy sustained robust growth with a surprising 3.3% GDP surge for Q4 2023, bringing full year growth to 2.5%. December retail sales soared by 5.6% YoY, marking the strongest increase since January 2023, and signaling a resilient consumer base. And although December's headline inflation ticked up to 3.4% YoY from November's 3.1% YoY, the overall trend is downward, with core CPI dipping to 3.9% from the previous month's 4.0%.
Across the pond, a somber economic outlook unfolded with signs of a decelerating economy. UK retail sales contracted 2.4% in December, while Eurozone sales declined 1.1% in November. Reduced economic activity and muted manufacturing perpetuated deflationary pressures on producer prices, reflected in a 2.8% decline in UK PPI. Similarly, the HCOB Eurozone Composite PMI (a popular index to track economic output) registered a preliminary reading of 47.9 in January, signaling an 8th consecutive monthly reduction in business activity. Inflation figures showed little change as core CPI for the UK remained steady at 5.1% down from a high of 7.1% earlier in May 2023, while core CPI for the eurozone continued its downward trend to 3.4% in December. In line with their American counterparts, both the ECB and BoE maintained rates in January, reaffirming their commitment to keeping rates at restrictive levels until inflation exhibits a sustainable trend toward their long-term targets.
China’s economic recovery exhibited mixed signals. Retail sales continued to rebound and were up 7.4% in December, while industrial output grew 6.8% YoY in December, the sharpest increase since February 2022. However, deflationary pressures still loom large as December CPI readings recorded a YoY decrease of 0.3% in consumer prices while PPI readings saw a decline of 2.7% YoY. Unemployment rate up ticked slightly to 5.1%. Chinese equity markets have slumped to multi year lows as confidence in the economy has evaporated amongst signs of sputtering growth and a deepening real estate malaise.
Looking ahead, the tension between the Fed and the markets will continue to drive the narrative for 2024. The Fed for its part has cautioned that the actual path would remain dependent on how the economy evolves. Markets, however, expect the Fed to cut 5-6 times in 2024. This may lead to some profit taking and presents the risk of further turbulence if market expectations are not met. Investors should seek to remain invested through a well-diversified portfolio that can help them weather such short and medium term shocks.
Risk Warning: Equity investments are not readily realisable and involve risks, including loss of capital, illiquidity, lack of dividends and dilution, and it should be done only as part of a diversified portfolio. Investments of this type are only for investors who understand these risks. You will only be able to invest in the company once you have met our conditions for becoming a registered member.
Please visit www.wahed.com/uk/ventures/risk for our full risk warning.
Risk Warning: As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
Please visit www.wahed.com for our full terms and conditions
Maydan Capital Limited, trading as WahedX, is registered in England and Wales (Company No. 13451691), registered office: 87-89 Baker Street, London, W1U 6RJ, UK. Maydan Capital Ltd (FRN: 963613) is an appointed representative of Wahed Invest Ltd (FRN: 833225), an authorised and regulated firm by the Financial Conduct Authority.Wahed Invest Ltd. is registered in England and Wales (Company No. 10829012), registered office: 87-89 Baker Street, London, W1U 6RJ, UK and is authorised and regulated by the Financial Conduct Authority: FRN 833225.
Subscribe For More Islamic Finance Content
As with any investment, a Wahed Invest Ltd investment puts your money at risk, as the value of your investment can go down as well as up. The tax treatment of your investment will depend on your individual circumstances and may change in the future. If you are unsure about whether investing is right for you, please seek expert financial advice.
Wahed Invest LLC (Wahed) is a US Securities and Exchange Commission (SEC) registered investment advisor. Wahed Invest provides brokerage services to its clients through its brokerage partner Apex Clearing Corporation, a member of NYSE - FINRA - SIPC and regulated by the SEC and the Commodity Futures Trading Commission. Registration does not imply a certain level of skill or training. Wahed does not intend to offer or solicit anyone to buy or sell securities in jurisdictions where Wahed is not registered or a region where an investment practice like this would be contrary to the laws or regulations. Any returns generated in the past do not guarantee future returns. All securities involve some risk and may result in loss. Any performance displayed in the advertisements or graphics on this site are for illustrative performances only.
Disclaimer: Wahed Technologies Sdn Bhd ("Wahed") is a Digital Investment Manager (DIM) licensee issued by Securities Commission Malaysia (eCMSL/ A0359/2019). It is part of Wahed Inc. Wahed is authorized to conduct a fund management business that incorporates innovative technologies into automated portfolio management services offered to clients under a license issued pursuant to Schedule 2 of the Capital Markets Services Act 2007. All investments involve risks, including the possibility of losing the money you invest, and the track record does not guarantee future performance. The history of returns, expected returns, and probability projections is provided for informational and illustrative purposes, and may not reflect actual future performance. Wahed is not responsible for liability for your trading and investment decisions. It should not be assumed that the methods, techniques, or indicators presented in this product will be profitable, or will not result in losses. The previous results of any trading system published by Wahed, through the Website or otherwise, do not indicate future returns by that system, and do not indicate future returns that will be realized by you.
Wahed Invest Limited is regulated by ADGM’s Financial Services Regulatory Authority (“FSRA”) as an Islamic Financial Business with Financial Services Permission for Shari’a Compliant Regulated Activities of Managing Assets and Arranging Custody [Financial Permission No. 220065]. Our ADGM Registered No. is 000004971. Wahed Invest Limited utilises Abu Dhabi Commercial Bank as its banking partner/custodian
Wahed assumes no obligation to provide notifications of changes in any factors that could affect the information provided. This information should not be relied upon by the reader as research or investment advice regarding any issuer or security in particular. Any strategies discussed are strictly for illustrative and educational purposes and should not be construed as a recommendation to purchase or sell, or an offer to sell or a solicitation of an offer to buy any security. Furthermore, the information presented may not take into consideration commissions, tax implications, or other transactional costs, which may significantly affect the economic consequences of a given strategy or investment decision. This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise of future performance.
There is no guarantee that any investment strategy will work under all market conditions or is suitable for all investors. Each investor should evaluate their ability to invest long term, especially during periods of downturn in the market. Investors should not substitute these materials for professional services and should seek advice from an independent advisor before acting on any information presented. Any links to third-party websites are provided strictly as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites nor do we endorse the content and information contained on those sites. When you access one of these websites, you are leaving our website and assume total responsibility and risk for your use of the third-party websites.
