HSBC strategists are projecting a double-digit rally in global equities for 2024, provided the Federal Reserve skillfully adjusts its monetary policy to stave off a recession. Historically, the S&P 500 has seen an average rally of 22% following similar actions by the Fed.
The HSBC team also anticipates a nearly 10% increase in the FTSE All-World Index, predicting it to close at 480 in 2024. They express a preference for US and emerging markets based on strong earnings forecasts. This outlook remains optimistic despite concerns over high interest rates, attributing improved risk pricing to recent market pullbacks and the ongoing recovery of the S&P 500.
Their favored sectors include technology, consumer discretionary, consumer staples, and industrials, which have been upgraded to overweight. Health care maintains a neutral view, while energy and financials have been downgraded to neutral and basic materials to underweight.
This perspective stands in contrast to that of other market analysts such as Morgan Stanley strategists who have suggested a bear market rally, and JPMorgan Chase (NYSE:JPM)'s too who referred to the situation as a "knee-jerk" reaction.
Potential risks highlighted by HSBC include a higher-for-longer interest-rate environment, geopolitical uncertainty, upcoming US elections, and a slowing Chinese economy.
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