End of galloping inflation, sluggish growth, geopolitical uncertainties… Here is what the year 2024 has in store for you on the financial markets according to the forecasts of three analysts, as well as their advice for protecting your savings.
On paper, the year 2023 seemed off to a bad start for the financial markets, with historically high inflation, repeated rate hikes, stalled Chinese growth, and the stagnation of the conflict in Ukraine.
Most investors expected a widespread recession, confirms Antoine Fraysse-Soulier, market analyst for the broker eToro. But the economy has held up (a little) better than expected, with global growth estimated 3%according to OECD forecasts.
Result: the CAC40, the star index of the Parisian market, closed the year up 16.5% 7543.18 points, its third best performance over the last ten years thanks in particular to the decline in inflation. While the S&P500, which brings together the 500 largest American stocks, has soared 24.2% in 2023.
Will these increases continue in 2024? Nothing is less certain. Given the numerous files in progress, the year risks being marked by high volatility, estimates Dorian Abadie, UCITS and stock market analyst at Meilleurtaux Placement. Since January 1, the CAC 40 has lost nearly 2%.
Invest in Scholarship at the best price ! 7 offers compared
Falling inflation
Investors’ attention will focus in particular on the key rates of the ECB and the Fed, while inflation is showing signs of slowing. It should return from 5.4% in 2023 to 2.7% in 2024 in the euro zone, according to ECB projections. Inflation would be 2.1% in 2025, reaching 1.9% in 2026.
Inflation is getting closer to the target of central bankers, who want to keep it around 2%so much so that the consensus now expects two rate cuts in 2024, including a first cut expected from next summer, indicates Antoine Fraysse-Soulier.
However, nothing is finished. Solid economic growth early in the year will force the market to push back its current estimate that Fed cuts will begin in the second quarter, notes David Kostin, a strategist at Goldman Sachs.
His prediction for 2024? A flat market over the first half of the year and gains which will be concentrated in the second half, when the fog surrounding the evolution of the Fed’s key rates and the American elections will be lifted.
Inflation: the current level of rates could be sufficient according to the vice-president of the ECB
Gopolitical uncertainty
This is also one of the themes to watch in 2024: more than half of the world’s population (51%) will be called to the polls next year, with elections scheduled in 76 countriesincluding the United States, India, Mexico and Russia.
Enough to maintain a climate of uncertainty, particularly in the United States, where Trump is running for a new term and is currently predicted to be the winner by the polls in five of the six most contested states, according to the New York Times.
Another source of volatility on the markets: the global geopolitical situation. If a ceasefire could be achieved between Russia and Ukraine, this would obviously be beneficial for the markets, particularly in Europe, explains Dorian Abadie.
The war between Israel and Hamas is also among the issues to follow. For the moment, this conflict has had little impact on the markets, but the situation could deteriorate if the region flares up, notes Antoine Fraysse-Soulier.
Stock market: securities account or PEA, how to make the right choice?
Profit breakdown
Company results will also be closely scrutinized. In the third quarter of 2023, 75% CAC40 companies published results better than expected and the profits of American firms increased by 10%specifies Antoine Fraysse-Soulier.
So far, most industries have managed to pass on rising costs through their prices. Some even took advantage of the situation to increase their margins, this is called greedflation, explains Dorian Abadie.
However, this pricing effect is now reaching its limits. Price increases cannot continue indefinitely. The impact on household consumption is starting to be felt, which risks hampering the next results season, adds Antoine Fraysse-Soulier.
The price of Worldline, the European payment giant, for example, fell by 60% in October after the company lowered its financial targets, citing the global economy (which) began to deteriorate, particularly in Germany.
Stock market: 3 tools to make money when the CAC40 falls
Risk of recession
Because it’s a fact. After having been the locomotive of European growth for several years, Germany should not escape recession in 2024. As for French GDP, it should barely grow 0.9% over this period, according to the Banque de France.
For the moment, the preferred scenario is still that of a soft landing (soft landing editor’s note), explains Dorian Abadie. However, it is necessary 12 18 months so that the rise in rates infuses the economy. Activity therefore risks continuing its major slowdown.
The Old Continent is not the only area in difficulty. China is still mired in a major real estate crisis, particularly following the difficulties of the giant Evergrande, which is posting estimated losses 328 billion dollars.
Other warning signs: Exports are falling and the country’s growth could slow 4.5% in 2024, according to economists.
Stock market: the pitfalls of fractional investment
Winning strategies
So what strategies should we prioritize in 2024? To counter the high volatility of the markets in periods of uncertainty, the safest way is to schedule recurring transfers to smooth out your entry point and focus on the long term, recommends Dorian Abadie.
To do this, you can select ETFs, that is to say funds designed to replicate the performance of an index or a basket of stocks, such as MSCI World where the S&P500in order to diversify your portfolio and minimize your risk of capital loss.
Another option: investors can turn to defensive valuesless sensitive to economic ups and downs and which notably bring together companies in the telecommunications, health and even energy sectors.
The actions that pay a dividend important, such as Air Liquide, Total, or Bouygues can also prove interesting for investors seeking stability for the year 2024, adds Dorian Abadie.
Online stock market: 2023 comparison of brokers and banks