How Should You Adjust Your Portfolio Amid Geopolitical Risks?

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How Should You Adjust Your Portfolio Amid Geopolitical Risks?

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Introduction (Geopolitical Risks)

This article delves into recent market insights and strategies, providing a comprehensive overview of the current economic landscape. We will explore inflation trends, market performance, and strategic investment approaches, offering actionable insights to help you make informed decisions.

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Inflation Trends: What’s Driving the Changes?

  • Inflation has been a significant concern in recent years, and understanding its trajectory is essential for investors. The global inflation rate has shown signs of deceleration, with the April 2024 consumer price index (CPI) report indicating core CPI falling to 3.6% year-over-year, compared to the 6.2% peak in April 2023. This reduction is a positive indicator for global economic stability, signaling a potential easing of inflation pressures.
  • The OECD has upgraded its global growth forecast for 2024 to 2.9%, up from 2.7% in 2023. This growth is driven by strong performances in major economies like the U.S. and China. The U.S. GDP growth is projected to reach 2.6% in 2024, an increase from 2.2% in 2023, supported by robust consumer spending and industrial output. This marks a significant recovery from the 1.8% growth rate in 2022.
  • Additionally, real U.S. GDP growth for Q2 2024 is expected to be around 2.0%, reflecting a stable economic environment. Core CPI inflation is anticipated to remain at 3.6% for the remainder of the year, showing the Federal Reserve’s efforts to control inflation are starting to take effect. The downward trend in inflation has eased fears of the Federal Reserve needing to maintain high interest rates for an extended period, making room for potential rate cuts later in the year.

Market Surges: What Sectors Are Leading the Charge?

  • The stock market has seen remarkable gains, with the S&P 500 index rising by 11.2% year-to-date. This follows a volatile 2022, where the index dropped by 18%, highlighting the market’s resilience and recovery.
  • Technology stocks have been at the forefront of this rally, with biotech stocks also performing well, rising 6.5% year-over-year. This sectoral strength continues from the previous year’s gains, where technology stocks rose by 12%, reflecting investor confidence in innovation and growth potential.
  • Interest rates have also stabilized, with the 10-year Treasury yield, which peaked at 5% last October, now around 4.42%. This easing of concerns over restrictive monetary policy signals potential rate cuts later in 2024. In comparison, the yield was 3.5% at the same time last year, showing a significant change in market expectations.
  • Furthermore, the Dow Jones Industrial Average has reached new heights, briefly crossing the 40,000 mark for the first time ever. This milestone is a testament to the market’s strong performance, driven by easing inflation fears and robust corporate earnings. The Nasdaq Composite has also shown impressive growth, with a year-to-date increase of 11.2%.

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Strategic Moves: How to Position Your Portfolio for 2024

  • Given the dynamic market conditions (Geopolitical Risks), strategic investment approaches are essential. Oil prices have stabilized around $79.53 per barrel, down 35% from their peak of $120 in 2022. Meanwhile, gold prices have surged to over $2,400 per ounce, up 20% from the previous year. This increase in gold prices indicates strong demand as a safe-haven asset amidst market uncertainties.
  • Geopolitical risks continue to pose challenges, impacting global trade and investment flows. For instance, tariffs on Chinese goods are expected to increase by 10%, affecting sectors like Industrials and Technology. Investors must remain vigilant and adapt to these changes to protect their portfolios.
  • The unemployment rate is projected to stabilize at around 3.9% by the end of 2024, ensuring a healthy labor market that supports consumer spending and economic stability.
  • Investors are also advised to consider sector-specific strategies. The technology sector, especially companies involved in artificial intelligence and renewable energy, is expected to continue its strong performance. On the other hand, sectors such as Financials and Industrials are poised to benefit from potential deregulation and fiscal policies depending on the outcome of the upcoming U.S. elections.


Inflation trends indicate a potential easing of pressures, while market performance highlights the resilience of key sectors like technology and healthcare. Strategic investment approaches, including diversification and monitoring geopolitical risks, are crucial for navigating the complexities of today’s financial markets.





Other reads:

  1. Can US Markets Maintain Their Resilience? (Macro Update)
  2. How Will the Fed’s Rate Decisions Impact Your Investments in 2024? (Macro Update)
  3. Warren Buffett did know this (Macro Update)

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Join the conversation with your own take on these topics in the comments below.

About the Author

Alessandro is a Professional Financial Markets researcher and he loves to share with you the most interesting charts and comments.

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