As a result of the bank crash, the market immediately revised its outlook on the US Federal Reserve (Fed) interest rate hike, with the market expecting the Fed to stop raising interest rates earlier and expect to see interest rates reverse to downturn this year
As a result of the bank crash, the market immediately revised its outlook on the US Federal Reserve (Fed) interest rate hike, with the market expecting the Fed to stop raising interest rates earlier and expect to see interest rates reverse to downturn this year
The issue of bank failures in the past causing concern to the public and destabilizing the investment image in general But at the same time, it is a catalyst that sharply reverses the Fed’s policy interest rate expectations. And make the growth stocks that have been under pressure throughout the past year come back to be attractive.
In the case of bank failures in the United States, whether Silvergate Bank, Silicon Valley Bank and Signature Bank It is considered an important event in history. As the assets of these banks combined were the highest since the 2008 subprime crisis, the US authorities managed to control the situation by declaring protections for their deposits.
and established the Bank Term Funding Program (BTFP) to prevent this incident from spreading to other financial institutions that could lead to an economic crisis. But that might not be enough. Because the phenomenon of bank failures in a row within a rapid period is an important warning sign that the Federal Reserve’s policy rate hikes continued during the past year were rapid and increased at a rate that too much
As a result of the bank crash, the market immediately revised its outlook on the US Federal Reserve (Fed) interest rate hike, with the market expecting the Fed to stop raising interest rates earlier and expect to see interest rates reverse to downturn this year
Most recently, the interest rate was estimated to increase to the highest level (Terminal Rate) at 5.00%, down from the original expectation of 5.50%. The latest Federal Reserve meeting was as expected. That is, raising the policy rate by only 25bps to a level of 4.75%-5.00%.
And the latest forecast from the CME FedWatch Tool as of April 5 indicates that there is a 56% chance that the Fed will not raise interest rates at the next central bank meeting on May 3, including It also indicated that the Fed has a chance to cut interest rates at its September meeting. Meanwhile, the 10-year US Treasury yield dropped sharply from around 4% to its most recent level of around 3.3%.
The picture of policy interest rates rapidly changing due to rising interest rates that put pressure on the stock market, especially growth stocks, caused the MSCI ACWI Growth Index to sell heavily by 29% last year. Reverse direction to stop up and may start to see interest rates down this year, giving growth stocks a chance to return to outperform faster than before.
The growth rate of global growth stocks (MSCI ACWI Growth Index) is likely to grow 8.64% in 2023 and 16.36% in 2024, while the S&P 500 growth rate is likely to be negative at -1.71. % in 2023 and return to growth in 2024 at 10.12%, but still a lower growth rate than Growth stock anyway.
While MSCI ACWI Growth Index currently has a forward P/E of approximately 24 times, which is 20% lower than the 3-year average of approximately 29 times, it is recommended to use this period as an opportunity to accumulate Quality Growth stocks. Stocks with outstanding growth rates And has a continuous growth performance, which these stocks are in a variety of industries, such as the technology group health care group and luxury goods group Or may choose to invest in mutual funds that have a policy to invest in Quality Growth stocks around the world can also be done.
If you have any questions about your own financial planning, you can send your questions to[email protected] I Article by Nattaporn Thorawongthawat AFPTTM Senior Wealth Manager