It’s better to travel than arrive
Global share markets continued to take a cup half full view, pushing higher over the month and taking global share prices to new all-time highs. Coupled with ongoing solid returns from bonds, Milford’s funds delivered gains across the board.
Much of the rally in shares over the past three months is down to ongoing profit generation from AI related activities. This is primarily in large US technology companies, but picking the winners remains key as fortunes differ significantly across the group. The key beneficiary remains Nvidia (semiconductor company), and we have been rewarded with our recent investments as the shares continue to power ahead, adding 12.6% last month. Technology giant Microsoft has also been a been a strong performer all year, adding 7.3% last
month. Another winner for us last month was software company Oracle, up 16.3%. On the other hand, US payment processor Fiserv (-19.4%) was a notable disappointment on softer quarterly results.
Outside of the technology companies, share markets delivered steadier gains. The UK outperformed and we remain heavily invested there. European banks continue to generate
strong returns and last month German bank Commerzbank (+19.1%) was the top performer for us in this space. Closer to home, we recently added exposure in Australia to healthcare
business CSL and were rewarded with a 13.1% gain last month.
Strong profits from large technology companies, coupled with optimism around the outlook has supported shares over recent months. But underlying global economic growth is slowing, and is likely to remain sluggish over the rest of the year. The catalyst is a slowing in global trade which will continue to weigh on a US economy that has reduced momentum. Support from falling interest rates and fiscal packages will cushion the weakness, meaning a recession in the US is unlikely.
After a strong stretch of gains in shares, some consolidation is to be expected. This may come alongside further evidence of a slowing in the global economy. This supports ownership of shorter-term bonds for diversification, as these will benefit if central banks cut interest rates further. But with a recession unlikely and a potential economic pickup down the track, we remain constructive on the medium-term outlook for returns.
