by Samuel Indyk and Danilo Masoni
LONDON, November 21 (Reuters) – European stock markets are expected to rise slightly in 2024, according to a Reuters survey, driven by optimism over the end of the cycle of monetary tightening by major central banks which should offset fears economic recession.
The pan-European benchmark STOXX 600 index is expected to reach 475 points by the end of next year, up 4.1% from the close, according to equity managers and strategists surveyed November 10-20. Monday at 456.26.
The EuroStoxx 50 index should increase by 2.5% to reach 4,450 points by the end of 2024, according to the median forecast.
The year 2023 has so far been generally positive for European indices, with a gain of more than 7% for the Stoxx 600 and more than 14% for the EuroStoxx 50. Much of this performance has been achieved in earlier this year, when the European economy seemed to benefit from China’s reopening after the pandemic.
But the euro zone’s economic difficulties subsequently worsened, particularly with the sharp slowdown in Germany.
“A slowdown in growth remains the baseline scenario for 2024,” said Chris Beauchamp, head of strategy at IG, “although a recession could still be avoided if energy prices moderate and the European Central Bank proceeds with judiciously prudent rate cuts.
The Frankfurt institute probably ended its unprecedented monetary tightening cycle in October which brought the deposit rate to a record level of 4% while it was still negative in July 2022.
Market participants are now expecting rate cuts next year, of around 90 basis points by the end of 2024.
According to the survey, managers and strategists forecast an increase of 1.4% for the CAC 40 by the end of 2024, 5% for the German DAX and 6.7% for the London FTSE.
(Reporting by Samuel Indyk and Danilo Masoni; poll, with contributions from Pranoy Krishna, Rahul Trivedi and Sarupya Ganguly in Bangalore; Blandine Hénault for the French version, edited by Kate Entringer)
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