US Equities Rebound and Dollar Dips on Interest Rate Hopes – Month in Review: May 2024
Macroeconomic Environment Review
The US dollar experienced a significant depreciation in May, losing ground against most major currencies. This shift in dominance stemmed from two primary factors. Firstly, some key economic data releases in the US surprised on the downside, raising concerns about the pace of economic growth. This sparked investor anxieties about the overall health of the US economy, prompting them to seek alternative assets. Secondly, a growing desire for portfolio diversification played a crucial role in weakening the dollar. Investors in developed markets, particularly, started allocating more exposure to non-USD assets, leading to a decreased demand for the greenback. This shift in investor behavior benefited several currencies. The Euro gained ground as anticipation rose for the European Central Bank (ECB) to be among the first major central banks to cut interest rates. Safe-haven assets like the Japanese Yen also saw a slight appreciation as risk aversion subsided.
At the same time, May 2024 saw a refreshing surge in US equities, with the S&P 500 closing the month roughly 4.5% higher. Fueled by a confluence of positive factors, investor confidence received a much-needed boost. Firstly, many companies exceeded analyst expectations with robust first-quarter earnings reports, showcasing resilience and growth potential. Secondly, whispers of a potential slowdown in future interest rate hikes from the Federal Reserve emerged in response to some weaker-than-expected economic data releases. This prospect of a less aggressive monetary tightening approach enticed investors back into the market, fueling buying interest in equities. Finally, the technology sector emerged as a clear leader, capitalizing on the continued high demand for cloud computing, software solutions, and cybersecurity services. While other sectors witnessed mixed results, with consumer discretionary stocks performing well in hopes of rising consumer spending, energy stocks lagged due to a slight dip in oil prices.
Monthly Performance Review
During May 2024, AENAON Systematic Strategies generated the following total returns:
Across the spectrum of our benchmark indices, our strategies’ performance during March was rather mixed. As a comparison, the US S&P 500 equities index gained 4.96%, the Barclay Hedge Fund Index posted a 1.73% advance, the Barclay CTA Index lost -0.29% while the other benchmark indices can be seen on the chart below.
Chart 1: Monthly Performance vs. Benchmark Indices – May 2024
Charts 2, 3 and 4: Inception-to-Date Performance vs. Benchmark Indices
You can always review our updated factsheets at the following Fundpeak links, with monthly performance updates and statistics since inception:
