Will There Be A Stock Market Correction in 2024?
Published / Last Updated on 25/07/2024
Many investors will have seen decent investment returns in the last 12 months ranging from 7-8% through to 11-15% depending upon your risk profile and the funds you were invested in.
Record Highs
The Dow Jones, the S&P 500 and Japan’s Nikkei have all set numerous record highs in July. In the UK and Europe, record highs were also seen in May. Only China and Hong Kong have been subdued due to trade tensions with the West and a slowdown of their economies in general.
Inflation/Interest Rate Outlook
Inflation is looking ‘sticky’ in the West and whilst many businesses and investors have already factored in an interest rate cut which has been delayed and we do not expect the Federal Reserve or the Bank of England to cut rates next week. We have always forecast an Autumn rate cut but it could now be in September. This may mean stocks are over valued as many firms are starting to issue profit warnings given the sustained period of higher interest rates.
We expect when interest rate cuts do come, bond and fixed interest markets will bounce up and equity markets may take a hit on devaluation of currencies as well as investors adjusting portfolios by reducing weightings in equities and increasing exposure again back to bonds and gilts.
Another Tech Bubble
Remember the dotcom bubble of 2000? We believe we are heading the same way with an AI Tech bubble. There are already ‘cracks’ in valuations, over valued in our opinion. This could create a correction this year.
Geopolitical Risk
Donald Trump, Russia/Ukraine, Gaza, China/US trade relations, China/EU trade relations, China/Taiwan risk and not forgetting North Korea and Russia getting friendly as well as Houthi rebels in the Red Sea.
We expect market correction at some point before the end of 2024.
