Il 2024, the fifth year after Covid, promises to be the first non-turbulent year for macroeconomic variables and the continuation of the global economic cycle, with a growth-inflation mix finally normalized. In particular for the second half a gradual increase is assumed per year reacceleration, supported by the decline in inflation and the trend towards easing of financial conditions. Cautious optimism shines through in the 2024 edition of "The Globe, Global Outlook" drawn up by the managers of Eurizon which they also hope for lower levels of volatility of the markets, compared to the peaks of recent years. If anything, attention will have to go to the point geopolitical calendar.
We hope stability on the markets for 2024" said "the CEO of Eurizon Saverio Perissinotto adding that “the capitalization of interest it will be the engine of performance for years to come." It shouldn't be scary if there are peaks volatility, the CEO continues, "which fall within market practice" and which "we are ready to manage professionally".
Macro scenario: declining inflation and economic growth at a moderate pace of expansion
Lo macro scenario of Eurizon reference see in 2024 an inflation which should complete the return towards the objectives of the central banks (around 2% for the USA and 1,5% for the Eurozone) and the economic growth stay positive, a moderate pace of expansion: futures on monetary rates discount that the Fed and ECB will hold i rates stop in the first months, and then lower them gradually starting from the central months of the year. If anything, in risk scenario a possible sharper than expected slowdown in the economy must be considered, as a delayed effect of the restrictive monetary policy, says the report.
Favorable context for the financial markets. Bonds are better than stocks
But if we keep within the macro framework of reference, the managers of the Sgr del Intesa Sanpaolo group prefigure a context favorable to financial markets and in particular they see markets bonds core still attractive in terms of yield to maturity and could realize capital gains thanks to the fall in official rates. The return opportunities are seen to be even greater credit markets, which add the possible restriction of spreads to the coupon flow.
On the other hand, the valuations for i appear less attractive stock markets, after the recovery in 2023, but can still provide satisfaction if supported by growing profits. Finally, for those investors with a more sophisticated palate, opportunities can also be sought in private markets, considering that the analyzes confirm that diversifying the asset allocation also on private markets increases the expected return and reduces the volatility of the portfolio, says the report. Among the alternative asset classes for 2024, investors are expected to favor Private debt and Infrastructure.
The risk lurks in the folds of geopolitics
According to Eurizon, among the elements the markets are paying attention to is a rent geopolitical calendar. In Europe at the beginning of June there will be a vote to renew the European Parliament. But the event that will attract the most attention will be the elections American presidential elections of November. “Biden he shows up at the event with a rather low popularity rating, which in the past has not been sufficient for re-election. If the challenger will be Trump, it will be the first time for a former President to re-nominate. A combination that could make predictions based on historical experiences of little use. This will be the main focus for the second half of the year,” the report says. These events add to the war in Ukraine, still ongoing, and the tensions in the Middle East, which are still not resolved. In a year that could see a normalization of macroeconomic variables, geopolitical events could instead be confirmed source of volatility. “We are faced with a complex context for the markets, but after years of zero rates, today all financial instruments offer positive returns” said Perissinotto.
China could be another stabilizing factor
Among the other topics of attention there is certainly the China which in 2023 disappointed expectations of a strong post-Covid restart, but still achieved the 5% growth target set by the government. For 2024, consensus expectations foresee the continuation of a stable growth path for China, but moderate compared to the pace of the pre-Covid cycle. The precise estimate of average annual growth is 4,5%. This too, if confirmed, would be an ingredient of stabilization non-inflationary for the global economic cycle.
