JPMorgan Predicts Challenging Year for European Stock Markets in 2024
JPMorgan strategists are forecasting a difficult year for European stock markets in 2024, citing slowing economic growth across the continent. The same team of strategists accurately predicted the performance of the MSCI Eurozone index this year, expecting it to rise 9.1% by the end of December 2023. However, they now maintain a price target for the end of 2024 that suggests no growth for the entire year, even if the eurozone countries avoid a recession. The strategists highlight several key factors driving their analysis, including expectations for lower bond yields, stalling US economic growth, and flat sales.
Market Outlook for 2024
According to JPMorgan strategists, the first half of 2024 is expected to see stocks decline as markets adjust to potential downward adjustments in earnings estimates. However, they anticipate returns to improve in the latter half of the year if central banks halt interest rate hikes and begin cutting. The strategists caution that the backdrop for risky assets is likely to be challenging in the first half of 2024, with periods of material weakness, but there is potential for improvement thereafter.
Contrasting Outlook for the UK Market
In contrast to their cautious outlook on the MSCI Eurozone index, JPMorgan strategists are "overweight" on the UK market, considering it a "relative winner" amidst a murky global growth outlook. They expect the FTSE 100 to close at 7,700 by the end of 2024, driven by factors such as high dividend yields, depressed valuations, and the inverse correlation between stock prices and the British pound. On a sector level, JPMorgan favors defensive sectors like healthcare, consumer staples, and utilities, which are expected to fare better during periods of uncertainty. The bank also holds a positive view on long-duration sectors such as real estate and communication services, anticipating their benefit from declining yields.
In conclusion, JPMorgan's forecast for European stock markets in 2024 suggests a challenging year ahead due to slowing economic growth. While the first half of the year may see market weakness, there is potential for improvement in the latter half if central banks adjust their policies. The UK market, in contrast, is viewed favorably by JPMorgan strategists, with expectations of positive performance driven by specific factors. These insights provide valuable guidance for investors navigating the European and UK markets in the coming year.
A Tough Year Ahead: JPMorgan's Forecast for European Stock Markets
JPMorgan's strategists are predicting a challenging 2024 for European stock markets, citing slowing economic growth as a key factor. This forecast, which suggests no growth for the entire year, even in the absence of a recession, could potentially impact new business formations in the region. The strategists identify several elements driving their analysis, including lower bond yields, a slowdown in US economic growth, and flat sales.
2024 Market Outlook: A Year of Two Halves
The first half of 2024 is expected to see a decline in stocks as markets adjust to potential downward revisions in earnings estimates. However, the latter half of the year could see an improvement if central banks halt interest rate hikes and begin cutting. This suggests that new businesses may face a challenging environment in the first half of 2024, but there could be potential for improvement thereafter.
A Brighter Outlook for the UK Market
In contrast to their cautious outlook for the MSCI Eurozone index, JPMorgan strategists are optimistic about the UK market. They expect the FTSE 100 to close at 7,700 by the end of 2024, driven by high dividend yields, depressed valuations, and the inverse correlation between stock prices and the British pound. This positive outlook could potentially make the UK a more attractive location for new business formations.
In summary, JPMorgan's forecast suggests a challenging year ahead for European stock markets, but a potentially brighter outlook for the UK. This could have significant implications for new businesses considering their options in these markets.
.svg)
