According to VanEck's latest global economic outlook, for the second half of 2024:
- Investors should continue to approach risk assets selectively.
- For Australian equities, we would caution against over-exposure to companies deriving their earnings from households and focus on earnings resiliency, strong balance sheets and positive free cash flow. Australian banks and domestic cyclicals could feel the pressure. An approach that underweights those sectors could be prudent.
- Despite a strong quarter, gold miners are still undervalued relative to the price of gold, and we think strong cash flows should see them continue to outperform the yellow metal into the backend of 2024. We could still see the US dollar come off and gold climbing to new heights.
- Emerging markets are becoming the new developed markets. On a relative fundamental basis, emerging markets in both debt and equity complexes, offer a greater risk premia.
- The “r” word should not be forgotten. While inflation has yet to be tamed by the RBA, a recession is still on Australia’s bingo card as the economy muddles through.
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