J.P. Morgan
Global Equity Capital Markets

2023 Year in Review /
2024 Outlook

JANUARY ..2.0.2.4

Global stock markets in 2023: a robust year led by the U.S., but with significant rotation between regions

U.S. equity markets were flattered by the performance of the “Magnificent 7”

Economic forecasts surprised to the upside in 2023…

…with investors increasingly viewing rates at a peak

Opinions differ on where we are in the cycle as the path of inflation was seemingly asynchronous with consumer resilience

Several market indicators support a soft-landing narrative

Recession probability indicators have dropped to below 10% from above 70% at the start of 2023
(1-yr recession probability, based on S&P 500 and BBB spread)

Disinflation

While inflation has been stubborn, latest Global Core CPI readings decreased to 4.2% from a high of 6.1% in Sept 2022

Labor

Though unemployment claims are increasing, the labor market remains tight globally

Rate cuts ahead

Market is anticipating that rates have peaked and that cuts may come as early as Q2’24

But quantitative tightening works with long and variable lags

U.S. and Global Real GDP are expected to slow in 2024 to 1.6% and 2.2% 2024 YoY respectively

Consumer sentiment

Consumer sentiment index has declined 15% from recent highs in July 2023

Household excess savings

Cumulated excess savings were U.S. $148bn est. at the end of Q3’23, down from a peak of U.S.$2.1trn (Q3’21)

Market valuations

S&P multiple is 22x, above pre-covid levels, even a amidst restrictive rate environment, decelerating earnings growth expectations, and geopolitical uncertainty

We also saw significant variation in sector performances

Macro forces aside, sectors faced their own unique cross currents with post-COVID normalizations and navigating the impacts of higher rates.

This led to a spread in sector performance as investors tried to square sector mini cycles with the macro cycle.

Tech was the winner, supported by AI tailwinds. Defensives and yield-sensitive sectors lagged, a trend we may see reverse in 2024

Scale and safety continue to outperform

Global ECM environment: volumes remain depressed vs. historic norms – catch-up opportunity in 2024?

Market Volatility | Shorthand_GettyImages-1283005660.jpg

Global ECM environment: relative strength in secondary ABBs, quick-to-market deals

J.P. Morgan’s key macro predictions for the year ahead

Key guiding predictions for 2024

Interest rates
easing

Headline inflation expected to drop
Core inflation likely to remain sticky
Rates starting to ease from Q3/Q4 next year

Decelerating growth
but no recession

Global growth to moderate to 2.2% YoY by 4Q24
Softening consumer trends with excess household liquidity depleted
Recession averted with an economic soft landing

Persisting
geopolitical risks

Ongoing Eastern European & Middle East crisis
U.S. presidential election, along with 40 countries holding national elections globally
Volatility may trade higher in 2024

Source: J.P. Morgan Research as of 31 December 2023

J.P. Morgan at the forefront of the ECM markets re-opening

Note: Listing J.P. Morgan-led landmark ECM deals in 2023YTD

Your J.P. Morgan Equity Capital Markets team

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