Our latest weekly markets update.
Overall, the trading week was marked by rising expectations that the Federal Reserve will shift to cutting rates sooner and faster next year, bolstering bets among bulls that equities are poised to reset record highs in 2024.
MSCI’s index of global shares added 0.12% and headed for a monthly gain of 8.7% after investors grew increasingly confident that U.S. interest rates have peaked, with the market narrative shifting to the timing of cuts.
Bank of America strategists, have laid out an optimistic forecast for the S&P 500, predicting the index will reach a new high of 5,000 by the end of 2024. This bullish outlook follows a notable monthly surge in the index, which saw its strongest gain since July of the previous year.
The bank’s equity team has identified a transition in market dynamics from broad macroeconomic concerns to a focus on individual company performance, dubbing the current climate a “stock picker’s paradise.” This shift is underscored by a significant increase in “idiosyncratic alpha,” which suggests that stock-specific dynamics are becoming more important for generating robust returns.
But, Investors are understandably having great difficulty determining where the economy is actually headed given it has not responded as it normally would to the extraordinary tightening of monetary policy.
Some of the major banks in the world expect global economic growth to ease further in 2024, squeezed by elevated interest rates, higher energy prices and a slowdown in the world’s two largest economies.
The global economy is forecast to grow 2.9% this year, a Reuters poll showed, with next year’s growth seen slowing to 2.6%. Most economists expect the global economy to avoid a recession, but have flagged possibilities of “mild recessions” in Europe and the UK.
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