Peter Garnry, head of equity strategy at Saxo Markets, believes so In 2024, investors face a year of uncertainty, marked by concerns about a possible US recession, ongoing inflation and wage issues, and uncertainties surrounding the global economy, as well as geopolitical risks such as the war in Ukraine, the Middle East conflict and crucial elections will be exacerbated in Taiwan, India, the US and possibly the UK.
In a recent article, Mr Garnry outlined key themes that will shape 2024, including concerns about the persistence of inflation and wages, which could potentially prompt central banks to maintain higher interest rates for a longer period.
He believes the year will be marked by significant geopolitical risks, with general elections in Taiwan, India, the US and a possible UK election in December all bringing uncertainties that could surprise markets. Furthermore, the question arises as to whether US technology can meet increasing earnings growth expectations and whether generative AI will provide another positive surprise and rekindle market enthusiasm.
Mr Garnry also stressed that the global economic outlook remains uncertain and there is the possibility of a recession or a re-acceleration, while the growth of electric vehicle technology raises questions about the future of the crude oil market and the possible impact on Saudi Arabia.
The fate of emerging markets remains in limbo, he stressed, as does the potential success of green transition stocks if interest rates continue to fall. Additionally, Mr. Garnry underscored the inevitability that financial markets and geopolitical events will surprise investors and stressed the need to address uncertainty as the New Year approaches.
He also raised critical questions about maintaining peace in the Middle East and Ukraine's ability to receive support from the EU and the US in the ongoing conflict with Russia.
“One thing is certain: financial markets and geopolitical events will continue to surprise us, and investors must be prepared to embrace uncertainty as a new year begins,” Garnry said.
He also pointed to a growing consensus that points to a mild recession in the U.S. economy, which is expected to occur around the middle of the year.
“Assuming the consensus is always wrong, this leads to two paths in 2024: 1) a hard landing scenario when high interest rates finally take hold, or 2) a renewed acceleration in global economic growth. Growth in Europe remains ugly, even as it stabilizes in a mild recessionary dynamic, while the US economy remains resilient,” he concluded.
Elsewhere, deVere Group chief executive Nigel Green warned investors last week, telling them to “buckle up” as markets were likely to be volatile in the first quarter of 2024 and could fall as much as 20 percent.
“Global markets have been unsettled since the start of 2024 and there is little sign that volatility will abate any time soon amid uncertainty over central bank interest rate cuts,” Green said.
“The main trigger right now seems to be the minutes from the Federal Reserve's December meeting, which suggest that interest rate cuts are possible this year, but there is almost no definitive indication of when – or if at all – this might happen.
“Given the continued lack of clarity from major central banks, including the Fed, we would not be surprised to see markets fall into correction territory this quarter. Investors should therefore prepare for further turbulence.”
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