The severe macroeconomic backdrop of slow economic growth and persistently high inflation poses challenges for the market.

As of now, GDP growth in 2023 has outperformed expectations, but against a backdrop of tightening financial conditions, weak trade growth, and declining confidence among businesses and consumers, GDP growth is slowing down. Recent prospects continue to face downside risks, including the escalating geopolitical tensions, such as the evolving conflict following Hamas terrorist attacks on Israel.

The last month of 2023 is destined to be tumultuous. Israel continues its airstrikes on the Gaza Strip. Houthi forces in Yemen launch frequent missile and drone attacks on Israel, citing “support for Palestine,” while also attacking commercial ships passing through the Red Sea.

Israeli vessels are hijacked in the Red Sea. A crisis in the Red Sea has erupted. Additionally, the impact of monetary policy tightening is greater than expected.

However, looking at the positive side, investors may potentially reap returns by taking on risks once again. As interest rates begin to stabilize, a new investment environment is emerging, presenting opportunities that may not have existed for years. Diversifying portfolios and making bold, conviction-based decisions may be crucial as different companies, asset classes, and economies show variations in performance.

As 2024 approaches, we anticipate a softening of inflation data and economic demand, as the driving forces of economic growth and risk markets are weakening. Overall, we maintain a cautious outlook on the performance of risk assets and the broader macroeconomic landscape for the next 12 months, given headwinds from currency, geopolitical risks, and expensive asset valuations.

Today, we explore the investment prospects for stocks, commodities, currencies, and emerging markets.

Since the beginning of 2023, global growth expectations have been low and steadily declining, heightening concerns about an economic recession. However, China’s reopening, massive fiscal stimulus in the United States and Europe, and the stability of residual consumer strength in the United States have supported economic growth. Additional market optimism is associated with ChatGPT, luxury goods, expectations of Fed rate cuts, and the rebound of Bitcoin, leading to a generally positive performance in risk markets. Despite the largest interest rate increases in decades, a large-scale war, energy crisis, regional banking crises, economic recessions in certain Eurozone areas, and signs of credit and consumption deterioration in the United States have occurred.

Positive economic data during the same period is enough to boost risk markets, which can be seen as complacency against the backdrop of declining consumer strength and increasing credit pressure. Household liquidity trends indicate that for 80% of consumers, the excess savings during the COVID-19 pandemic have disappeared, and by mid-2024, only the living conditions of the top 1% of consumers with the highest incomes may be better than before the pandemic.

Outlook for the S&P 500 in 2024

In 2022, after the Federal Reserve decided to raise interest rates rapidly, the S&P 500 index fell by nearly 20%. However, the stock market rose in 2023, recovering some lost ground. Despite the continued rise in the stock market so far this year, the prospects for profit growth are not as robust as investors had hoped. The concentration of equity in the S&P 500 is currently at its highest level since the 1970s, indicating that the rise in the stock market this year is driven by a group of large-cap technology stocks. Before the previous economic slowdown, as the record pricing power period of 40 years began to slow down with the slowdown of high inflation, this dynamic suggests that corporate profit margins will face significant resistance in 2024.

According to Morgan Stanley Research, the earnings of the S&P 500 index are expected to grow by 2-3%, with a target stock price of 4,200 points.

JPMorgan economists predict that by the end of 2024, the growth of the U.S. and global economies will slow down. At the same time, as major central banks shrink their balance sheets at an unprecedented pace, and borrowing rates for consumers and corporate sectors remain restricted, liquidity continues to contract. In U.S. households, excess liquidity and cash-like assets have decreased from a peak of $3.4 trillion to $1 trillion, and by the second quarter of 2024, these liquidity and cash-like assets will be essentially depleted.

Meanwhile, geopolitical risks remain high, with two major conflicts currently underway, and national elections scheduled in 40 countries, including the United States. Therefore, it is expected that stock market volatility in 2024 will generally be higher than in 2023, and the extent of the increase will depend on the timing and severity of the eventual economic recession.

Another feature of the past two years is the unexpected events in the financial system: In 2022, the UK pension system faced pressure, and in early 2023, we saw several banks collapse, particularly in the United States. The worst moments may have passed, but, as repeatedly emphasized by the Financial Stability Board, the International Monetary Fund (IMF), central banks around the world, and other institutions, we cannot rule out the possibility of more events occurring.

Global economic growth in 2023 exceeded expectations. Despite synchronized tightening of monetary policies by central banks worldwide, it has been demonstrated that the private sector is resilient, and positive fiscal measures and commodity price shocks have also played a mitigating role. Some economists expect that the global economy will avoid a recent downturn.

However, we are aware that economists have consistently failed in predicting recessions. Will this time be different?


(Note: The probability of an economic recession is based on the Survey of Professional Forecasters (SPF) conducted by the Federal Reserve Bank of Philadelphia. The chart aligns the expansion/recession periods in the United States with the median recession probability from the survey conducted two quarters earlier.

Data source: Allianz Global Investors Global Economic and Strategic Outlook, Bloomberg (data as of September 30, 2023). Past performance is not indicative of future results.)

From this chart, it appears that the most likely scenario is that the probability of a recession has been trending downward. However, in the financial markets, anything is possible, and it is essential to remain vigilant at all times.


Global Real GDP

%change Q4/Q4

% thay đổi Q4/Q4

Source: JP Morgan Forecast

Nguồn: Dự báo của JP Morgan

Commodity Market Outlook

After experiencing a decline in 2023, it is anticipated that Brent crude oil prices will remain relatively stable in 2024, with a further slight decline of 10% expected in 2025.

Since June, JP Morgan’s forecast for Brent crude oil has seen minimal changes, projecting an average of $83 per barrel in 2024. This is expected to be supported by robust supply and demand fundamentals.

Despite ongoing economic headwinds, the market anticipates an increase in oil demand by 1.6 million barrels per day by 2024, supported by strong emerging markets, resilient U.S. demand, and a soft but stable Europe.

However, to maintain balance in the oil market, the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) alliance may need to continue production limits. It is expected that Saudi Arabia and Russia will extend voluntary production/export cuts into the first quarter of 2024. Assuming an increase in oil production by Saudi Arabia and increased exports by Russia, global oil inventories in 2024 may remain stable.

In the U.S. natural gas market, surplus supply may limit the upside risk for U.S. natural gas prices in 2024. Two scenarios are expected to influence the situation in 2024. The first scenario involves oversupply and low prices, which may persist into the first half of 2024 or even throughout the summer. The second scenario is that raw gas demand may exceed the capacity of regional supply growth, leading to a slight price increase.

Speaking of metals, the performance of gold and silver is expected to outperform other industries. The Fed’s interest rate cuts and the anticipated decline in real yields in the United States are expected to push the price of gold to new historic highs by mid-2024, with an average reaching $2,175 per ounce in the fourth quarter. Similarly, the price of silver may follow gold, averaging around $30 per ounce in the fourth quarter.

JPMorgan also stated in their latest market insights: among all metals, they have the highest confidence in the mid-term bullish forecasts for gold and silver from 2024 to the first half of 2025.

In the agricultural market, prices are expected to see a modest increase, especially in the first half of 2024. According to market price forecasts, by 2024, the outlook for sugar prices is bullish, while the markets for grains, oilseeds, and cotton are expected to experience a slight uptick. In 2024, sugar prices are projected to average $0.30 per pound, and wheat prices are expected to average $6.33 per bushel.

In the uncertain macroeconomic landscape, how will the performance of foreign exchange be in 2024?

Participants in the foreign exchange market still hold diverse views on the macroeconomic outlook, ranging from a soft landing, further Fed rate hikes, to economic recession. Needless to say, they need to tactically navigate the transitions between these scenarios, as they entail different outcomes for the U.S. dollar.

Although the future path of the U.S. dollar appears rocky, it is expected to remain at elevated levels and may even reach new highs. If interest rate cuts materialize, by 2024, the U.S. dollar is projected to maintain a significant share among global currencies, still exceeding 56%.

The Federal Reserve (Fed) seemed to signal a shift in policy stance during its interest rate meeting two weeks ago. While the Fed kept interest rates unchanged at the current level, it effectively tolerated market bets on a series of rate cuts in 2024. This led to a decline in U.S. Treasury yields, a weakened U.S. dollar, and supported the widespread expectation that the U.S. dollar will gradually depreciate in 2024.

However, major analytical institutions currently hold divergent views on this matter. A report from Morgan Stanley suggests that the U.S. dollar is likely to remain strong in 2024 due to continued favorable interest rate differentials and the dollar’s safe-haven nature. Wall Street bank strategists prioritize selling the euro against the dollar as the primary trading theme for 2024. In fact, if European economic data continues to weaken, the risk of a technical recession further increases. There remains significant downside risk for the euro against the dollar, and it may even return to parity in 2024.

The risk for U.S. dollar bears is that the Federal Reserve maintains interest rates at elevated levels for longer than the market currently expects, or global markets succumb to a more severe economic recession than anticipated.

Danske Bank analysts also hold a positive view on the U.S. dollar for 2024, although they acknowledge the possibility of the recent weakness in the dollar extending into early 2024. Danske Bank is bearish on the euro/dollar strategically and anticipates the currency pair falling to 1.10 within three months, dropping to 1.07 after six months, and reaching 1.05 after 12 months.

Meanwhile, HSBC takes a contrary stance to the market’s general sentiment towards the U.S. dollar, insisting that the dollar will strengthen in 2024. HSBC’s forecast indicates that due to the possibility that the Federal Reserve and other central banks may not ease monetary policy as much as the market expects, the euro against the dollar will trend lower. Therefore, HSBC warns that the market has expressed a lot of optimism, and the barriers to sustaining this optimism are even higher now. HSBC Americas Research Director Daragh Maher states, “Contrary to the consensus, we still expect the dollar to strengthen in 2024.”

HSBC predicts that by the end of the first quarter of 2024, the euro against the dollar will fall to 1.06, below the current spot level near 1.1, dropping to 1.04 by mid-2024, and reaching 1.02 by the end of the third quarter and year-end.

How should we view the U.S. stock market in 2024?

Let’s take a look at the forecasts of several major financial institutions. Against the backdrop of divergent predictions about the U.S. economic outlook, some opinions suggest that due to robust corporate performance providing support, stock prices will rise by about 10%, forecasting a “stock market rise amid economic slowdown.” On the other hand, there are concerns that weak personal consumption in the United States could lead to a decline in stock prices. Opinions on the impact of economic trends on the market vary. Deutsche Bank believes that if the economy meets expectations, earnings per share (EPS) for companies will increase by 10%. If GDP grows by 2%, the EPS growth rate will reach 19%. Therefore, the bank states that “labor market tightness is a precursor to improved corporate productivity, with potential upside for stock prices,” believing that stock prices will rise even in the event of an economic slowdown.

Bank of America predicts that the United States will experience a “Goldilocks” market in 2024, characterized by an economy that is neither too hot nor too cold. They believe that by the end of 2024, the S&P 500 index will rise to 5000 points. Even with a slowdown in GDP growth, the earnings per share (EPS) for the S&P 500 is expected to grow by 6%. The bank states, “With increased demand for equipment upgrades and improved corporate efficiency due to artificial intelligence (AI), profit margins will also improve through cost-cutting.”

Goldman Sachs also predicts a soft landing for the U.S., expecting the U.S. economy to grow at a slow pace. However, they project a modest increase in the target stock price for the S&P 500 to 4700 points. The overall upward movement in stock prices is expected to be delayed to the second half of the year due to robust economic growth, pushing expectations for the Federal Reserve (Fed) to begin interest rate cuts into the second half of the following year.

Based on the analysis of each sector mentioned above, it can be observed that the opportunities in 2024 primarily come from the foreign exchange market and gold-silver, as the short-term trends of these products are relatively stable, making them more suitable for range trading. Future live courses will also incorporate technical trading methods for range trading. In short-term trading, the safety factor of funds can actually be higher compared to long-term trading.