Peter Garnry, head of equity strategy at Saxo Markets, believes that in 2024, investors face a year of uncertainty marked by concerns over a potential US economic recession, persistent inflation and wage issues, and uncertainties surrounding the global economy, exacerbated by geopolitical risks such as the war in Ukraine, the Middle East conflict, and pivotal elections in Taiwan, India, the US, and potentially the UK.
In a recently published article, Mr Garnry outlined key themes shaping 2024, including concerns about the persistence of inflation and wages, potentially leading central banks to maintain higher policy rates for an extended period.
The year, according to him, is marked by significant geopolitical risks, with general elections in Taiwan, India, the US, and a potential UK election in December, all posing uncertainties that could surprise markets. Additionally, questions loom over whether US technology can meet soaring earnings growth expectations and if generative AI will deliver another upside surprise, reigniting market enthusiasm.
Mr Garnry also highlighted that the global economic outlook is uncertain, with the possibility of a recession or a reacceleration, while the growth of electric vehicle technology raises questions about the future of the crude oil market and the potential impact on Saudi Arabia.
The fate of emerging markets remains in the balance, he noted, as does the potential success of green transformation stocks if interest rates continue to decline. Additionally, Mr Garnry underscored the inevitability of financial markets and geopolitical events surprising investors, emphasising the need to embrace uncertainty as the new year approaches.
Furthermore, he raised critical questions about achieving peace in the Middle East and Ukraine’s ability to garner support from the EU and the US amid its ongoing conflict with Russia.
“One thing is for sure, financial markets and geopolitical events will never stop surprising us and investors must be ready to embrace uncertainty as a new year is set to begin,” Mr Garnry said.
“Under the assumption that consensus is always wrong, this leads to two paths in 2024, 1) a hard landing scenario as high interest rates finally bite, or 2) a reacceleration of growth in the global economy. Growth remains ugly in Europe albeit stabilising in a mild recession dynamic while the US economy remains resilient,” he concluded.
Elsewhere, deVere Group’s chief executive, Nigel Green, issued a warning to investors last week, telling them they should “buckle up” as markets are likely to be volatile in the first quarter of 2024 and could drop by up to 20 per cent.
“Global markets have been spooked since the start of 2024 and there’s little sign that volatility will be reduced any time soon amid uncertainty regarding central bank rate cuts,” Mr Green said.
“Arguably, the main trigger currently is minutes of the of the US Federal Reserve’s meeting in December showed interest rate cuts were possible this year, but they provided almost no definitive indication on when – of if even – that might happen.
“With the ongoing lack of clarity from major central banks, including the Fed, we would not be surprised to see markets falling into correction territory this quarter. As such, investors should buckle up for more turbulence.”
