In addition to monitoring sector-specific developments, advisers should keep a close eye on key economic indicators, particularly in the US labour market.
The strength of the jobs market has been a critical factor in the Federal Reserve’s decision-making process, and upcoming data releases will continue to shape market expectations.
While recent Fed commentary has been supportive of equities, any signs of labour market weakness could prompt a shift in sentiment, potentially leading to increased volatility. Clients need to be prepared for these fluctuations, with strategies in place to manage downside risks.
The global economy also faces significant geopolitical risks that could disrupt markets. Trade tensions, conflicts, and political instability in various regions could all have ripple effects on financial markets.
Advisers must stay alert to these external factors and consider how they might impact client portfolios, particularly those with international exposure.
For example, currency fluctuations are likely to remain a key consideration as central banks diverge in their monetary policies. Hedging strategies may be necessary for clients with substantial investments in foreign markets to mitigate the impact of exchange rate volatility.
Real estate remains another area of interest as rates decline. Lower mortgage rates can stimulate demand, leading to price increases in both residential and commercial real estate. Advisers should consider whether clients might benefit from increased exposure to real estate.
But they must also be cautious of the potential for overheating in certain markets, where prices have already risen significantly. Conducting thorough market analysis and ensuring that clients are investing for the long term, rather than chasing short-term gains, will be critical.
Amid these opportunities, the greatest risk may be complacency.
As rates drop and markets appear to recover, it can be tempting for both clients and advisers to assume that the worst is behind us. But the current environment is far from stable.
As always, advisers will be guiding clients toward maintaining diversified, resilient portfolios that can weather potential storms, rather than simply seeking out the highest returns.
Nigel Green is chief executive and founder of deVere Group
