During periods of great uncertainty, financial markets are subject to significant fluctuations. In 2024, the global financial marketplace will face a significant transformation driven by economic, geopolitical, and technological tensions. Typically, US stocks, oil, and Bitcoin are often considered prime indicators for market predictions because they represent key sectors of the economy, financial markets, and emerging digital asset trends, providing comprehensive insights into overall economic health and investor sentiment.
The Fed to decide the US stock market direction
First and foremost, it is necessary to understand the full outlook for the global economy and the nuances of the interaction of the forces at work. Economic growth, while robust, is expected to be slower at around 2-3% in the major economies. This slowdown is the ripple effect of monetary tightening worldwide, combined with geopolitical tensions that significantly impact international trade. Stock markets, especially indices such as the S&P 500, will likely experience fluctuations in line with these broader economic trends.
US500, Weekly timeframe
Speaking about the US500 chart, it aims for an all-time high of 4,800 after the breakout above the local high of 4,600. If the US500 overcomes 4,800 and holds above this level for several weeks, by the end of 2024, the index may reach the next target of 5,600, the 161.8 Fibonacci level.
However, the possibility of a recession in the United States in 2024 is a major factor, and economic models suggest a 60-70% probability of this event. The Federal Reserve’s response in the form of lower interest rates could reduce the federal funds rate to around 1.5-2.0%.
History shows that quick rate cuts lead to the massive decline of risky assets. Therefore, if this scenario occurs, the US500 may decline to 4,100 and 3,550 the next year.
There is cautious stability in the fixed-income market. With US corporate and government bond yields expected to stabilize at 3-4%, investors increasingly lean towards these safer assets. Morgan Stanley’s forecast for 10-year US Treasury yields of 3.95% and German bond yields of 1.8% by the end of the year reflect this trend.
Oil market forecast
The oil market expects a turbulent 2024, with projected prices fluctuating between $70 and $100 per barrel. Global oil prices are expected to average around $81, influenced by slowing global growth and changing energy policies. In addition, the shift towards renewable energy and growing emphasis on sustainability will likely influence oil market dynamics, potentially leading to increased investment in green energy and a gradual shift away from fossil fuels.
However, next year will be very eventful, with elections in the US, Russia, Ukraine, and Taiwan and continued high tensions in the Middle East. Moreover, no one knows how the conflict between Venezuela and neighboring Guyana will end. A certain escalation may undoubtedly affect the oil market, and prices will increase significantly. Also, the recent COP28 summit did not bring the desired results on reducing the production and consumption of fossil fuels.
XBRUSD, Weekly timeframe
The XBRUSD chart looks bearish and has recently broken several support levels. Now, the price is approaching the major support at 72.20. If XBRUSD declines below this level, it may slide to 64.60 and 58.20.
However, we shouldn’t forget that the price formed a massive falling channel globally. Therefore, when XBRUSD overcomes the channel’s upper border, it will signal the overall trend reversal, opening the way to 94.50 and 120.00.
Analyzing a major cryptocurrency
In the volatile world of cryptocurrencies, Bitcoin’s trajectory in 2024 is among the most hotly debated topics. With projections ranging from $50,000 to $180,000, market sentiment is largely influenced by regulatory changes, the pace of institutional adoption, and advances in blockchain technology. But we should not forget the relationship between the major cryptocurrency of our time and the FOMC key rate.
Such optimistic forecasts are being made at the moment solely because the key rate is incredibly high, and there is great hope for continuing the bullish trend. But slowing economic growth in the US will likely put serious pressure on the next upswing.
BTCUSD, Weekly timeframe
BTCUSD is now in a major bullish move and has already broken several resistance levels. However, using the Fibonacci retracement, we will see that the price is approaching the resistance area of $47,000, corresponding to the Fibonacci level of 61.8. When the Federal Reserve cuts the rate due to a weakening economy, as it did in 2019, it will send risky assets down due to the worsened macroeconomic situation. At that moment, we expect BTCUSD to change the direction to bearish, targeting the supports at $36.000, $32,000, and $25,000.
Growing institutional interest in bitcoin and other cryptocurrencies and increasing adoption of blockchain technology across sectors indicate a maturing market that may see greater stability and less volatility than in previous years. However, regulatory changes add risks, playing a crucial role in shaping the cryptocurrency market’s trajectory.
What else to look out for?
Asian markets will continue to become increasingly attractive, continuing the underlying trend. Emerging markets are expected to become more important in the global economy in 2024, potentially offering new investment opportunities and driving global trade dynamics. The evolution of trade agreements, tariff policies, and geopolitical relations will play a significant role in shaping the economic landscape of these regions. Countries such as India, Brazil, and parts of Southeast Asia are poised for significant growth that could increase foreign investment and boost global trade activity.
Summary
In summary, predicting the future is a very difficult endeavor. In this article, we have tried to identify the major changes in the financial markets, using the most striking and significant examples for investors, which may be particularly useful in 2024.
Life dictates its own rules, and all aspects affect each other. The only thing that can and should be said is to keep your finger on the pulse and keep up with current changes. But what is important is that 2024 will present us with at least 365 opportunities to realize our potential.
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