The beginning of 2024 has been characterised by changing market expectations. Initially, the sentiment overall was largely pessimistic, as market players anticipated rate cuts. Since then, it has shifted unexpectedly towards becoming more optimistic, with many stock markets at or near all-time highs, research shows.
Saxo Bank recently released the findings of its recent client survey, shedding light on investor expectations and sentiments on the financial markets for the second quarter of 2024. Amidst the backdrop of unpredictability in global financial markets, the response from investors mirrors concerns over market uncertainty.
“Learning about investor expectations is vital for navigating through dynamic markets. The results of this survey reaffirm the importance of staying informed about macroeconomic events and geopolitical tensions, guiding our clients to make informed investment decisions in the MENA region’s interconnected market landscape,” said Damian Hitchen, the CEO of Saxo Bank Mena.
“Investors, including Saxo clients, came positively into 2024 after a strong 2023 in which a recession was avoided and great returns were delivered in equities. This position has been rewarded so far in 2024 despite unusual volatility in expectations around central bank policy rates and inflation,” Peter Garnry, Head of Equities Strategy at Saxo Bank, added.
The survey consisted of 185 respondents and was distributed to Saxo clients between march 12 and April 2, 2024.
US is expected to outperform, while Europe may lag behind
The panel of clients had a divided sentiment towards the primary US S&P 500 index, with just over half of the respondents expecting an increase. At the same time, nearly 30 per cent anticipate a decrease.
When asked about regional performance, half of the investors see North America outperforming other financial regions. Conversely, approximately 40 per cent of the respondents believe Europe will lag, highlighting the mixed conviction among market participants.
Central bank policies play a crucial role
Investors cite central bank policies as a critical factor influencing this quarter’s financial markets. The survey highlighted that geopolitical tensions, the upcoming U.S. election, and ongoing recession concerns are also significant factors that could impact investment strategies.
“With interest rate cuts continuing to be postponed, geopolitical tensions still high, and the US election getting closer, there is a lot of room for increased volatility in financial markets that merits that clients review whether their portfolios are set up for a turbulent quarter and beyond,” Garnry said.