Global Market Indexes Show Uncertain Start in 2024
Bull and bear statues stand outside the Frankfurt Stock Exchange, a fitting metaphor for the uncertain start major stock indexes in Europe and around the world have made to 2024. Investors await fresh rounds of data and signals from monetary policymakers as they try to gauge the trajectory of the global economy.
The Wall Street giant, Goldman Sachs, predicts earlier and faster policy rate cuts in the Eurozone than previously implied by the European Central Bank. They see a first rate cut in April, followed by 25 basis point reductions at each meeting until rates reach 2.25% in early 2025, implying six rate cuts totaling 150 basis points in 2024.
Deutsche Bank is also holding that the European economy will begin its transition into expansion in 2024 but “won’t reach its new equilibrium.” The German lender noted that the structural effects of the pandemic, the Russia-Ukraine war, geopolitics, climate change, and the green transition remain uncertain over the medium and long term, limiting visibility of the trajectory of growth and inflation beyond this year. They highlighted three key factors that will influence the path of the economy and markets: monetary transmission, the labor market, and competitiveness.
Meanwhile, Barclays European equity strategists point out that the fourth-quarter rally for risk assets took European stock markets from “oversold to overbought” and shifted sentiment from “depressed in October to euphoric by year-end.” They feel that the direction of travel for markets remains to the upside over 2024, with potential for rate cuts and broadening acceptance of a soft landing.
Despite the uncertainty, the overall sentiment is cautiously optimistic. The global market indexes are showing a mix of volatility and positive outlook as the world economy attempts to steady itself in 2024.