Having reached the end of the first semester, the 2024 has already partially revealed its true face markets. Between challenges sudden And assets resilientthe winners for now have been those who have chosen to make investments with a higher level of risk, favoring theequity compared tobond. A report by State Street Global Advisors analyzes the topic in detail.
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Markets between challenges and resilience
In particular, so far, the risky assets they surprised with a remarkable resilience, maintaining growth despite persistent inflation and worsening conflict in the Middle East. In this context, i markets bonds, seen as potential winners in 2024, have run into trouble as persistent inflation has fueled concerns about prolonged high interest rates. However, we continue to believe that fixed income debt remains a favorable investment, thanks to current yield levels, slowing growth and continued disinflation, while we remain cautious on risky assets favoring quality names in equity markets. THE emerging marketsalthough vulnerable in the current global scenario, offer opportunities in debt and some equity sectors.
Equity between record numbers and selectivity
The equity sector has maintained incredible momentum this year. Thanks to solid economic data and earnings, all-time highs were reached in the United States, Europe and especially Japan. However, experts believe that moderation remains appropriate. Continued declines in equity risk premiums, high valuations (especially in the US) and shifting interest rate expectations may eventually dampen enthusiasm. The strength of the US dollar shows no signs of abating, which is why greater caution is needed towards emerging markets. For the rest of the year, several factors persist that may drive stock performance across regions, demonstrating that opportunities should be evaluated with individual geographies in mind.
Strategic positioning objective
The 2024 remains, as expected, a year of strategic positioning for the investors, with the need to carefully analyze the numerous macroeconomic factors and maintain the flexibility to intervene when clearer signals emerge. Despite uncertainty about the Federal Reserve’s future path on interest rates, experts expect disinflation in the United States and weaker economic activity compared to last year. We remain convinced that it is heading for a soft landing, with the possibility of reducing rates as early as the summer. Furthermore, State Street estimates that the Bank of Canada and the Bank of England will begin reducing rates in July and August respectively, while in Japan there will be a 15 basis point increase in the second half of the year.
In short, the 2024 a complex and dynamic year ahead marketswhere it will be crucial for investors to adopt a strategic and flexible approach to navigate the opportunities and challenges presented by the global macroeconomic and geopolitical context.
