September to Remember

In this September 2024 monthly edition of Liquid Real Assets (LRA) Market Update, John Vojticek and his team take a look at how public markets viewed listed real assets (real estate, infrastructure, natural resources and commodities).?

Click below for the full report, including our Market Commentary, Why it Matters and:

Macro Dive

• Jobs wow
• ISM says services hot, employment not
• Tit-for-tat

Real Assets, Real Insights:

• That’s a big joint venture (Real Estate)
• Tower power (Infrastructure)
• Crude oil prices spring (Commodities)

Market Commentary

Global equities continued to climb higher in September after a rough patch in the first week of the month. Stocks quickly rebounded from weak payroll and manufacturing data in the U.S. early in the month and moved higher for the next several weeks given a plus-sized rate cut from the U.S. Federal Reserve (Fed), fresh economic stimulus from China late in the month, and other encouraging news, sending many stock market indices, including the MSCI World Index, to new all-time highs. Then October happened. Halloween typically marks the end of October, but things turned spooky at the start of the month this year. A crippling strike by port workers on the East Coast and Gulf of Mexico started on October 1st and held supply chains and shipping cargo hostage for a few days. That same day, Iran launched a missile strike on Israel in retaliation for earlier events, upending stock markets, sending volatility higher in both equity (VIX Index) and fixed income (MOVE Index) markets, and causing crude oil prices to spike. (1)

All Real Assets classes, with the exception of Treasury Inflation-Protected securities (TIPS), bested the global equity market’s return in September. Commodities led the pack with strong returns in Agriculture, Industrial Metals, and Precious Metals. Global Real Estate securities followed with strength out of the Asia Pacific region (aside from Japan), Australia, and U.S. data centers. Gains were slighter in Global Infrastructure securities and Natural Resource equities. TIPS finished the month with positive returns but lagged the broader equity market. Over the first three days of October, Real Assets have seen Commodities and Natural Resource equities move higher, while Global Real Estate securities and Global Infrastructure securities have declined along with the broader market. (2)

Why it matters: The port strike appears to be resolved as we write with a tentative deal reached, but it will still take a few weeks to unwind the backlog of cargo, and it’s not a definitive deal yet, rather an extension of the current contract to January. We don’t know if the current Middle East conflict will broaden into an all-out regional war, but we do know Israel has vowed to retaliate, indicating the situation is not likely to simmer down anytime soon. We have no idea whom the next U.S. President will be, and while it’s narrowed down to two choices, their platforms and expected policies are as different as could possibly be. Yet, a strong jobs report from the U.S. looks to undo the initial stock slide in the U.S. Will October be the third month in a row that starts on a down note but achieves new highs by month-end, or are there ghosts and goblins to still appear? With all this in mind and so many other unknowns, is your portfolio set to handle whatever may come next, good or bad?

In the full report:

• Macro Dive: This week we’ll review the latest employment data in the U.S. and what it might mean for future Fed action. Next, we’ll look at Institute of Supply Management (ISM) data that also provides some caution on employment. Then, we’ll give a recap of the situation in the Middle East that is keeping us on edge.
• Real Assets, Real Insights: First, we’ll look at a recent joint venture in the data center space aimed at providing more capacity for artificial intelligence (AI). Then we’ll look at a deal in the communication infrastructure space that crosses the public and private markets. Finally, we’ll review what’s sending crude oil proves skyward to date in October.?

Click here to read the full report

This report is for professional/institutional investors only. To access, please validate accordingly and select “Global English” site for a smoother journey.

1) Source: Bloomberg as of October 3, 2024

2) Source: Bloomberg as of October 4, 2024

Any mentions of specific properties or securities are for illustrative purposes only and should not be considered a recommendation.

Past performance is not a guarantee of future results. The opinions and forecasts expressed are those of the authors and may not come to pass. Forecasts are based on assumptions, estimates, views and hypothetical models or analyses, which might prove inaccurate or incorrect.? Forecasts are not a reliable indicator of future returns. DWS does not intend to promote a particular outcome to the U.S. election (or other countries’ elections) due to take place. Readers should, of course, vote in the election as they personally see fit.

All investments involve risks, including potential loss of principal.

Index returns do not reflect fees or expenses, and it is not possible to invest directly in an index.

Glossary

One basis point (bps) equals 1/100 of a percentage point.

The?U.S. Federal Reserve, often referred to as?"the Fed,"?is the central bank of the United States.

Inflation is the rate at which the general level of prices for goods and services is rising and, subsequently, purchasing power is falling.

The Move Index is a volatility index developed by Merrill Lynch that reflects the implied volatility for U.S. government bonds with different maturities.

The MSCI World Index tracks the performance of mid- and large-cap stocks in 23 developed countries around the world.

Treasury Inflation-Protected securities (TIPS) are a form of U.S. Treasury bonds designed to protect investors against inflation. These bonds are indexed to inflation and pay investors a fixed interest rate as the bond's par value adjusts with the inflation rate.

The CBOE Volatility Index (Vix) is a trademarked ticker symbol for the Chicago Board Options Exchange Market Volatility Index. It is a popular measure of the volatility of the? S&P 500 as implied in the short-term option prices on the index.

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