General market recap

At the beginning of 2023, people were worried that the world economy would shrink and maybe even go into a recession. However, China’s reopening after the COVID lockdown, large fiscal stimulus in the U.S. and Europe, and the residual strength of U.S. consumers stabilized the economic growth. People once again, started to feel hopeful because of good news about things like ChatGPT, luxury goods, weight-loss drugs, expected interest rate cuts by the Fed, and the rise of Bitcoin. 

During 2023, risky investments did pretty well, even though interest rates went up a lot, there were wars, an energy problem, banking issues in some places, and some parts of Europe had a recession. But the overall market success might happened because people were too relaxed, even though some people were struggling to pay off loans and most people had already spent the extra money they saved during COVID-19.


S&P 500 Outlook 2024

J.P. Morgan Research predicts the S&P 500's earnings are expected to grow by 2–3% next year, reaching an earnings per share of $225, but they anticipate a price target of 4,200 with a downside risk. Their economists foresee a slowdown in U.S. and global growth by the end of 2024. 

There are high geopolitical tensions, with ongoing conflicts and upcoming elections in 40 countries, including the U.S. As a result, they expect stock market ups and downs to be more frequent in 2024 compared to 2023, and the level of volatility will depend on when and how severe an economic downturn might occur.

Stock Market Outlook 2024

The 2024 stock market outlook hinges on the Federal Reserve's ability to achieve a "soft landing," a term without a strict definition but essentially means the Fed needs to balance rates to curb inflation without triggering a recession, which if it happens would be a "hard landing." The economy seems to be gradually slowing down under controlled circumstances. The Fed's efforts to tighten credit, coupled with decreased consumer spending and a cooling inflation rate, are anticipated to ease the pace of the U.S. economy and its impact. How significantly this slowdown occurs is expected to influence the stock market predictions for 2024.

The Best Stock Of 2023

In 2023, the stock market was influenced by the enthusiasm surrounding generative artificial intelligence, prompting significant investments by tech firms in the semiconductor, computer hardware, and software sectors. Generative AI, capable of crafting diverse content from basic descriptions, drove substantial interest in Nvidia, identified as the best AI stock. Evercore ISI labeled Nvidia as potentially the most crucial stock globally, with its stock soaring by 234% by December 22nd, 2023. The company experienced remarkable growth in sales and earnings, primarily attributed to the escalating demand for graphics processors and data-center hardware for AI applications. Nvidia outperformed Wall Street's expectations in its fiscal third quarter, with a 593% surge in earnings and a 206% increase in sales, majorly fueled by the booming sales of AI processors for data centers. Will this trend continue in 2024? Let’s hope so. 

Commodity markets outlook
It is expected that most commodities range from neutral to mildly bullish.

Commodities were the best-performing asset class in 2021 and 2022, and coming into this year, it was a potential contender to be the top performer again, particularly with fears around gas supply over the 2022/23 European winter, and heightened geopolitical tensions.

OPEC+ policy will significantly shape the future of the oil market. This year, both the group and specifically Saudi Arabia have shown a commitment to maintaining price support, likely continuing through 2024. However, as OPEC+ implements more cuts, reaching agreements on further reductions might become challenging. Presently, we anticipate a balanced oil market in the first half of 2024, followed by a shift to a deficit in the latter part of the year, leading to an upward trend in prices from their current levels. An important risk factor concerning oil supply revolves around Middle East tensions and the potential for increased enforcement of US sanctions on Iran. Such developments could tighten the oil market more than anticipated.

European natural gas remains neutral as we enter the 2023/24 heating season with storage at full capacity. Analysts predict that storage levels will decrease by the end of this winter compared to last year but will remain comfortably above average. This should facilitate the process of refilling storage during the following summer and impact gas prices during 2024. 

Precious metals are likely to move higher next year, and we see gold trading to new record highs in 2024. Expectations that the Fed will start cutting rates, along with the expectation of a weaker US dollar should see investment demand return for gold. Stronger investment demand, combined with a continuation of central bank buying will be bullish for gold prices.

FX Market

Foreign exchange market volatility, which unexpectedly decreased during the first half of the year due to synchronized monetary policies, is poised for a comeback. As some central banks, especially in emerging economies, consider easing their monetary policies while others, like the Fed, maintain a pause, and a few, such as the Bank of Japan, contemplate tightening, we can anticipate a revival of volatility. 

Conclusion 

The outlook for 2024 encompasses various market sectors with a certain degree of optimism and caution.

The oil market is likely to experience balance in the first half of 2024, but a deficit is expected towards the end of the year, leading to an increase in oil prices. However, tensions in the Middle East and the potential tightening of U.S. sanctions on Iran pose a significant risk to oil supply.

The European natural gas market remains neutral with full storage capacity, with an anticipated decrease in storage levels by the end of winter but staying above average, which could impact gas prices in 2024.

Prices of precious metals, especially gold, are likely to rise in 2024 due to expectations of Fed rate cuts and a weaker U.S. dollar, potentially reviving investment demand.

On the forex markets, a return of volatility is expected due to differing central bank policies