Welcome to this year’s outlook from Caspar Rock, Chief Investment Officer, Cazenove Capital.
“A likely peak in interest rates has prompted us to add to equities. However, elevated valuations and buoyant market sentiment mean we have a neutral stance on stocks as we enter 2024. We are overweight government bonds, given attractive levels of income.
The US has defied forecasts of a recession, with consumer spending supported by a strong labour market and household savings. However, the interest rate rises we have seen to date are still likely to take a toll on activity and we expect the US economy to slow in 2024.
The prospect of interest rate cuts should support sentiment in the near term. However, central bankers will be very wary of the risk of a “second wave” of inflation. Markets may be disappointed if rate cuts are not delivered at the pace, or to the extent, that is currently anticipated” said Caspar Rock Chief Investment Officer.
Higher interest rates have had a greater impact on consumers in the Eurozone and the UK, with both regions now close to contraction. In Asia, ongoing challenges in China’s housing market continue to depress activity. By contrast, the outlook for Japan is brighter as consumer and business spending rises and the corporate sector embraces structural reform.
This degree of divergence across global markets is unusual and could create tactical opportunities over the coming year.”
To find out more, read our wealth management outlook for 2024 here or watch our investment team discuss our outlook.
