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Principal Financial Group spotlighted a handful of key themes for investors to watch out for during the first quarter. See the themes outlined in detail below:
- Global growth is coming off a boiling point. Economic expansion is now seen as easing with global monetary tightening gradually takes its toll. “U.S. recession risk has diminished, although consumer headwinds are rising. China and Europe are likely to see another year of tepid growth,” PFG said.
- The Federal Reserve and other central banks are readying for rate cuts. “Most central bankers have now adopted a more dovish stance and rate cuts are likely in 2024. Yet, they may come slightly later than markets anticipate and will likely be gradual—unless economic growth surprises to the downside.”
- Volatility is likely for equities in the first half of the year, but a rally could be in the cards for the second half. An upswing in the stock market would be bolstered by expected central bank easing, the financial institution noted. The firm added that a drop in bond yields have forced the markets to push higher but this move will only be sustained if earnings deliver.
- Alternative investments can offer market participants diversification against the traditional equity bond portfolio breakdown. “Commodities are facing an unclear near-term future as investors weigh up geopolitical risks versus greater U.S. oil supply.”
Shifting attention to Thursday and the Nasdaq Composite (COMP.IND), S&P 500 (SP500), and the Dow (DJI) are each lower while Treasury yields (US2Y) (US10Y) see limited movement.
