Pension and Financial Markets Performance Update: Q1 2024

What’s Been Happening in the Markets

Spring is in the air, and it is safe to say that 2024 has started with a bang. And, with winter now firmly behind us, stock markets globally have well and truly blossomed.

Equity markets across the world are unrecognisable from what they were a year ago when the majority of financial experts were forecasting plunging share prices, spiking unemployment, and dwindling economies. Twelve months on and all of that has changed, with share prices really beginning to flower.

And for the second quarter in a row the US equity market has led the way, with the S&P 500, which tracks the performance of America’s biggest 500 companies, rising by more than 10% between the beginning of January and the end of March.

Key to that has been the performance of a once little-known company called Nvidia, which has seen its share price spike over the last 12 months as more and more investors put their faith in the company’s ability to make money from the interest in artificial intelligence (AI). The chipmaker has grown so big that it is now the third-most valuable company in America, behind only Microsoft and Apple. Its share price has increased by an eyewatering 250% over the past year.

Not to be left out, the UK also had a stellar three months with the FTSE 100, which tracks the performance of Britain’s 100 biggest companies, rising by more than 2.5% during the first quarter. Despite continuing political uncertainty, with the timing of a general election still yet to be announced, the country’s blue-chip companies saw success as firms, such as jet engine maker Rolls Royce, insurer Beazley and gambling giant Flutter, all had a barnstorming three months.

The US: A Superchip in the Market’s Cap

Line graph displaying the S&P 500 index from January to March 2024, showing an overall upward trend with some fluctuations. Early January marks the lowest point, with a steady rise towards March.

There is one company that has captured the attention of investors and that is Nvidia. Perhaps even a year or six months ago few people would have known much about the chipmaker, which started life in 1993 as a specialist provider of 3D graphics for computer games. More than 30 years later, however, it has become one of the world’s hottest properties and has been riding the wave of the surge in attention on AI, with the California-based firm now being one of the most dominant suppliers of AI hardware and software.

Nvidia was one of the main reasons behind the S&P 500’s strong showing in the first quarter of this year. The blue chip index rose by almost exactly 500 points during the three months to the end of March, largely thanks to Nvidia unveiling a new “superchip” for training AI models, the most powerful the company says it has ever produced. And, in February, the company’s market value also touched $2tn for the first time after it reported that its turnover had more than doubled to over $60bn.

“Accelerated computing and generative AI have hit the tipping point.. Demand is surging worldwide across companies, industries and nations.”

- Nvidia chief executive Jensen Huang as the company unveiled its financial results.

His company’s share price rise would appear to show he is right.

Line graph of the S&P 500 index over the last 10 years, indicating a long-term upward trend with some periods of volatility. Overall, the trend shows significant growth over the decade.

Europe: A Not-So-Quiet Quarter

It is hard to outshine the US market, but European stocks gave it their best try, with the pan-European Stoxx 600 index, which tracks the performance of 600 companies across Europe, finishing the quarter more than 6% higher than when it started, To put this into perspective, for the whole of last year, the gains were 13% and so the latest jump is more than respectable.

Investors have become ever more convinced that the European Central Bank will soon start cutting interest rates after Eurozone inflation eased to 2.6 per cent in February – significantly down from its peak of 10.6 per cent in October 2022. The latest figure is still above the 2% target set by the European Central Bank, but it gives investors hope that the central bank will soon be able to slash rates and inject more life into the economy and stock markets.

Again, one of the biggest winners in Europe was Denmark’s Novo Nordisk, the health care giant that became Europe’s biggest company last year. Its share price increased by almost 50% in 2023 thanks to the success of its obesity drug Wegovy, which helps patients lose weight as well as decreasing the risk of stroke and heart attack. And, during the first three months of this year, its share price rose again by more than 25% after announcing it had agreed to buy Cardior Pharmaceuticals, a German biotech company developing heart disease treatments, for €1bn.

The UK: A Steady March

Line graph displaying the FTSE 100 index from January to March 2024. It shows a dip in mid January, followed by a recovery and a gradual upward trend through March.

While the US stock market made a strong charge during the first quarter, the UK did more of a saunter. The good news is that the FTSE 100 finished the first three months of the year higher, but the gains were more modest.

One of the problems the UK has is that none of the giant technology companies, the likes of Apple, Amazon, and Microsoft, are listed on the FTSE 100 and so the index has missed out on the soaring interest in AI.

However, Britain’s volatile political landscape is also weighing down on investors, with a general election still yet to be called and the polls showing that people appear to be losing faith in the ruling Conservative party.

But there was one big winner during the first quarter: Rolls Royce. The tensions between Russia and Ukraine as well as between Israel and Palestine have increased security fears and, as a result, countries’ spending on defence, with Rolls Royce a clear beneficiary. It is one of largest providers of defence aero-engine products and has seen its share price rise by more than 30% this year. The uptick by Rolls Royce meant the FTSE 100 finished the quarter more than 200 points higher than when it started.

Line graph showing the FTSE 100 index over the last 10 years. It displays significant volatility with a sharp drop and recovery around the year 2020, and general upward movement since then, peaking near the end of the graph.

Penfold: Springtime Success

With springtime firmly upon us our pension plans certainly experienced the green shoots of success, making gains across the board in the first quarter of last year. In particular, our Sharia plan, which invests in companies that comply with Islamic finance principles, rose 12.1% between the end of December 2023 and the end of March this year.

A multi-line graph titled "Penfold Sustainable and Sharia Plans," comparing the performance of different investment plans, including Sustainable Plan Levels 1, 3, 5, and a Sharia Plan from September 2020 to March 2024. The lines depict fluctuations with a general upward trend in recent months.

Also performing strongly were our sustainable plans, with Level 5 climbing 7.7% between the end of December and the end of March.

Penfold’s funds are built on strategically diversified portfolios designed to decrease risk exposure, limit potential losses, and improve overall investment performance.

Line graph titled "Penfold Standard Plans," showing the performance of four levels of standard investment plans from July 2019 to March 2024. The lines depict fluctuations with a general upward trend in recent months.

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The home screen is also your window into all the latest happenings in your pension, much like a handy bank statement. And here’s a nifty feature: got some extra cash? Boost your pension in a jiffy by tapping ‘Add money’. Think of our app as your pension’s cozy little home, right in your pocket, ready for you whenever you need a quick check-in or a financial top-up.

Risk warning

With investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice and past performance is not a reliable indicator of future performance.

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