Central bank rate cuts that began in Q2 2024 are expected to continue into the second half of the year, according to Standard Chartered.

This policy shift is crucial for markets, as it avoids a severe economic slowdown and sets the stage for a soft landing. 

The move will likely support an extended earnings growth cycle, resulting in equities continuing to outperform bonds and cash in the second half of 2024.

The bank advises investing in US and Indian equities, which are projected to outperform their peers. In Europe, the barbell-like strategy aligns with the improved growth outlook, leading to an “overweight” stance in the technology and healthcare sectors. 

In China, the focus should be on select beneficiaries of government policies, with an “overweight” stance in technology, communication services, and consumer discretionary sectors.

Standard Chartered suggested holding emerging market (EM) US dollar bonds and gold as diversifiers.  

“As we approach a potential inflection point in the form of central bank rate cuts and the US election, it is crucial for investors to adjust their portfolios,” said Ayesha Abbas, Managing Director and Head of Affluent and Wealth Solutions, Europe, Middle East and Africa, and UAE at Standard Chartered Bank.

(Editing by Seban Scaria seban.scaria@lseg.com )