Market Trend estimation for 2024

Will Artificial Intelligence (AI) still be in trend? 

The biggest driver of US equity indices in 2023, with outsized gains for technology stocks, will remain into 2024. Interestingly, the mania after the ChatGPT release and similar large language models has inevitably died down as investors figure out the immediate impact on stock prices and wider society. But Artificial Intelligence (AI) will continue to drive gains for investors and has the potential to profoundly alter employment, as any new technology has done in the past. Business investment is set to increase as more people realise the benefits of AI as a co-pilot and more in their day-to-day functions.  

Further out, there’s no doubt the longer-term prospect of a bump in productivity via AI is material, with some economists estimating well above a 3% boost to US productivity by the end of the decade. But as with any major transformation in society, the road could be bumpy with heightened volatility that often accompanies new technology.  

In the near term, the Magnificent Seven will offer a degree of support for growth due to the sheer size of the companies in the major stock indices. But as adoption evolves, so too might we see shifts in the leadership. PWC, a consulting group, valued the economic potential of AI at $15.7 trillion annually by 2030 ^[4]. Compared to the current global GDP of roughly $110 trillion, the impact could be extraordinary and opportunities in automation should prove huge.  

What other trends will there be? 

Long term trends like decarbonisation, deglobalisation and demographics will be ever present in 2024 and beyond. These 3Ds are essentially mega themes that are forcing investors to recalibrate their view of the world as inflation stabilises and interest rates potentially remain elevated for a longer time than seen in recent years. The energy transition story is well known and one of those forces reshaping markets and the broader economy. Demographics are having a similar impact, with the some of the challenges of both set to be addressed by technology and Artificial Intelligence (AI).  

Other trends include the circular economy, an alternative economic model first described in 1990. This involves products not being thrown away after use, but reused for as long as possible, and if possible, for an equivalent product. It is not just about recycling, but also about ensuring products are able to be reused. This theme appears to have great potential but is still not very widespread and will require political regulation, incentives, and co-operation.  

Reference 

1. “Emerging market catalysts – HSBC”. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-weekly/2023-12-11/ . Accessed 27 Dec 2023 

2. “2023 in review: Rates, rallies and reflections – JP Morgan”. https://www.jpmorgan.com/insights/outlook/market-outlook/2023-in-review-rates-rallies-and-reflections . Accessed 27 Dec 2023 

3. “What I learnt about the FTSE 100 in 2023 – The Motley Fool”. https://www.fool.co.uk/2023/11/15/what-i-learnt-about-the-ftse-100-in-2023/ . Accessed 27 Dec 2023 

4. “PwC’s Global Artificial Intelligence Study: Exploiting the AI Revolution – PwC”. https://www.pwc.com/gx/en/issues/data-and-analytics/publications/artificial-intelligence-study.html . Accessed 27 Dec 2023 

5. “Goldman Economists Cut Recession Chances To 15% – Investopedia”. https://www.investopedia.com/goldman-economists-cut-recession-chances-to-15-percent-7965659 . Accessed 27 Dec 2023