Real Assets lagged broader equities

In this edition of Liquid Real Assets (LRA) Market Update, John Vojticek and his team take a look at how public markets viewed listed real assets (real estate, infrastructure, natural resources and commodities). 

Click below for the full report, including our Market Commentary, Why it Matters and:

Macro Dive

• Retail Sales hit a rough patch

• Jumpin’ Jack Flash PMIs

• 2%, but still no cut

Real Assets, Real Insights:

• New kid in town (Real Estate)

• Where “stuff” comes from (Natural Resources & Commodities)

• Unearthing Australia’s Natural Resource Riches (Commodities)

Market Commentary

Global equities ended our review period marginally in positive territory, but nonetheless the MSCI World Index hit a new all-time high. Positive investor sentiment faded in the days following the latest U.S. Federal Reserve (Fed) meeting but picked up again with strong performance seen from NVIDIA Corp. (which surpassed Microsoft as the world’s largest company) and as waning demand from U.S. consumers raised hopes that the Fed might cut rates earlier than previously expected. A first rate cut in the U.S. in September seems back in play, although far from certain, and investors expecting a second cut this year could be disappointed as numerous Fed speakers reiterated that it may take more time to bring inflation down to their 2% target. Meanwhile, in the U.K., where inflation has fallen to 2% (in May), the Bank of England (BOE) chose to hold policy rates the same (just following our review period), while the National Bank of Switzerland announced their second interest rate cut this cycle.

Against this backdrop, Real Assets saw slightly negative performance this week, with only TIPS finishing on positive ground. Global Real Estate Securities lost the least as U.S. property stocks saw gains, but losses in other parts of the world dragged the group down. Commodities and Global Infrastructure securities followed, while Natural Resource equities dropped a bit more, with sharper declines seen from Metals & Mining names.

In the full report, we’ll address Why it Matters and take a Macro Dive into the latest U.S. retail sales data, updates to the Purchasing Managers’ Index (PMI), and then consider the latest interest rate decision from the BOE. In Real Assets/Real Insights, we’ll start with a look at the latest addition to the listed U.S. Real Estate Healthcare space. Next, we’ll look at the growing demand for natural resources and the role they play in the global economy. Finally, we’ll take trip to the Southern Hemisphere and look at specifics for Australia on how natural resources and commodities play an important role in its economy.

Click here to read the full article.

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Any mentions of specific properties or securities are for illustrative purposes only and should not be considered a recommendation. Forecasts are based on assumptions, estimates, views and hypothetical models or analyses, which might prove inaccurate or incorrect.  Past performance is not a reliable indicator of future returns.

Source: Bloomberg as of June 19, 2024.