During 2024, the global economy will try to consolidate the path it began on last year: moderate global inflation, lower interest rates, and avoid a possible recession. Argentina, for its part, has other challenges: achieve a monetary anchor, fight the growth of excessive prices and rebuild its meager reserves through what is expected to be a record harvest. How does all this impact the stock markets? What keys will be important to take into account when investing?
United States: is it on the way to soft landing?
Before seeing how it will evolve the US economy in 2024, we will see how its global development was. Analysts maintain that there was a good performance in 2023, with a slight moderation in growth and a slowdown in inflation. The strong adjustment in interest rates, which started in 2022 and continued until the middle of that year, finally seems to have ended after achieving price control without leading to recession.
Martin PoloChief Strategist of Cohenthus analyzes what is to come: “2024 begins with the challenge of consolidating the trend, and for this it will be important that the global economy continues with soft-landing, allowing inflation to converge to the pre-pandemic level without recession. In this sense, the actions of the Fed will be keywhich promises to lower the reference rate in a context in which the American economy shows no signs of moderation and with inflation showing some resistance”.
For its part, since TSA Stock Market explained: “It cannot be said that the risks have completely dissipated, but the consensus increasingly indicates that a soft landing of the real economy will be achieved. It will be the success or failure of achieving this goal that will largely define the fate of global financial markets in the coming year. “The key will not be that the interest rate cuts finally arrive, but that they do not occur in a recessionary context.”
Wall Street: what could happen this year
A report of Invest in the Stock Market (IEB) highlighted that, from the point of view of technical analysis, the S&P500 is undergoing lateralization in an area very close to the maximums from which it began to fall at the beginning of 2022. “The question that this lateralization generates is whether it is an accumulation movement to then look for new highs or distribution to correct in the short term“, they expanded.
It should be noted that there was a good results season that could continue to drive the market. However, analysts explain, the base scenario remains cautious. It should be noted that the latest statements of Raphael Bostictitle of the Atlanta Federal Reservethey suggest that The market is overly optimistic that policy rate cuts will begin in March.
Dollar, what will the evolution be like in 2024
Regarding the outlook for 2024, The main investment banks emphasize that the performance of the dollar will be coupled to the future of the global and North American economy. To exemplify it from TSA Stock Market They highlighted that since Fidelity International We are working with four possible scenarios for 2024: cyclical recession (60%), “soft-landing” (20%), “balance sheet recession” (10%) and the prolongation of the current situation (10%).
“In it second scenario the dollar I would lose strength due to lower demand for “safe-haven” assets and in the third scenario would come out markedly favored“, they explained from the same broker. For its part, Wells Fargo Investment Institute, whose base scenario is a slowdown in the global and North American economy for the beginning of the year, anticipated that The dollar will strengthen in the first half, while the recovery in the second half will benefit emerging markets and their currencies.
Europe, Japan and China: what challenges will they have in 2024
A brief tour of TSA Stock Market indicates how other important economies in the world reach 2024. In the case of Japan, it is worth highlighting, The BoJ decided to maintain its interest rates at -0.10%. “The Japanese approach contrasts with that of the rest of the developed economies: Not only is it the only country with its reference rates in negative territory, but it also decided to stay out of the monetary contraction cycle that took place in the rest of the world,” they highlighted.
In the case of Chinaseveral analysts explained that It was the disappointment of 2023 due to its poor performance. The country’s economic growth was lower than expected and that was reflected in the iShares MSCI China ETF (MCHI), which had a drop of -13% in 2023. ““Much of the performance of 2024 will depend on the fiscal and monetary stimuli that the Government can provide.”they explained from TSA Bursátil.
Finally, in the same report, they rule out what the challenges of the Euro zone. As a first measure, mention is made of the disparity within each country, which makes it very difficult to European Central Bank find the point of optimal monetary policy. It is also explained that Inflation could end 2024 above the target and that higher prices are likely to be tolerated rather than risk further slowing down an economy with low growth prospects.
On the other hand, analysts agree that there is a latent risk regarding costs, mainly energy, given the continuity of various war conflicts and its impact on the price of oil and gas. “If a colder than expected winter occurs, the stage would turn dark for the block“, they closed on this region.
Argentina: how global expectations impact the local market
Argentina presents local challenges but global economic and financial dynamics will also impact financial assets. So, Only in the second semester would there be a tailwind in favor of the region with the economic recovery and the consolidated cycle of lower interest rates. However, it will be Local factors will determine the evolution of the Argentine markets.
“If it materializes in inflation levels of +25% monthly from December to March, it would already return to multilateral real exchange rate levels practically similar to those prior to the December devaluation. This introduces doubts about the sustainability of the proposed exchange rate regime and, consequently, in the positioning in financial assets“he explained TSA Stock Market. Both the future of the DNU and the “Omnibus Law” will be key milestones for the financial markets.
Already getting fully into what it is variable incomefrom IEB they warn that the S&P Merval could be overvalued. “After reaching US$1,000 (CCL), a correction began, leaving it again at levels close to the historical mean and median. In this way we could say that the market, from a historical perspective, is at a reasonable value“, they indicated.
With a similar analysis, from TSA Stock Marketthey highlighted that there would not only be an overvaluation of equities, but perhaps an undervaluation of sovereign and corporate fixed income in relation to stocks. “Public securities in dollars continue with depressed prices and country riskmarkedly above 1,000 basis points, continue to suggest that investors maintain their reservations (although to a lesser extent) about the sustainability of public debt in foreign currency,” they explained.
Source: Ambito
