Investor confidence 'will return' in 2024

After a tough year of high inflation and rising interest rates, Husselbee thinks markets could see signs of recovery in the new year. 

However, he warned there was still the possibility of a recession in 2024. 

He said: “While headline inflation has slowed, mainly as result of the reopening of global supply chains, underlying core inflation has remained sticky, prompting further interest rate rises.

“The market consensus today has shifted to a view that we have entered a period of higher interest rates for longer and bond prices once again have come under pressure.

“At the same time, we have seen a broad rebound in equity markets since mid-October 2022, which has seen those portfolios with the highest equity weighting recovering back to, or at least towards, their recent historic peaks at the end of December 2021.”

Hussellbee added while “brutal” repricing of bonds in recent years had been “uncomfortable”, it had led to attractive valuations across the asset class. 

He went on to say: “While a recession is still possible in 2024, we believe that if it happens it will be a small ‘r’ recession.

“Consumers are still spending money and most people have a job. What happens to inflation remains pivotal, though it looks as though we are now through the worst. 

“More volatility may well lie ahead, but markets have calmed down from the high levels of distress seen in recent years. 

“Green shoots should emerge in the economy, provided people can stay in jobs.”

However he acknowledged high interest rates would cause difficulties for companies and consumers and this coupled with inflation “weighs on market sentiment”.

He concluded: “Our overall outlook on markets is generally positive driven by the attractive valuation of long-term fundamentals.

“People can get stuck in a mire of negativity, but investors’ confidence will return.”

tara.o'connor@ft.com

What's your view?

Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com.