CIO Outlook 2023 | Wealth Management | Deutsche Bank

Annual outlook 2024: Finding growth

In Perspectives, the Deutsche Bank investment magazine, we review the landscape for the year ahead to identify the broader issues affecting investors over both short- and long-term horizons.

Click here to activate this content.

We think that 2024 is likely to be a decent year for investors. Despite all the very evident current global challenges – economic, geopolitical, climatic – investors should keep faith with markets. As this annual outlook explains, prospects in fact appear reasonably good for the main asset classes in 2024. Risk management will however remain crucial. 

 

At present, markets are engaged in a non-stop debate over the likely extent and timing of future monetary policy loosening. Markets will remain sensitive to changing views here: we believe that the first rate cuts by the Fed and the ECB should happen in 2024 but we don’t expect too many. But, as always, it is important to look beyond immediate market volatility and focus instead on what economic and other developments in 2024 could mean for investors – and what might force a reassessment. 

 

The big issue remains economic growth. We think that growth is likely to slow in coming quarters, as tight financial conditions increasingly have an impact on economies. But markets also need to stay convinced that growth will pick up again later in 2024. 

 

We discuss the implications of this for asset classes in the opening sections of this annual outlook. With inflation coming down slowly, and limited rate cuts expected in the U.S. and the Eurozone, there will be opportunities in sovereigns and fixed income will be an important asset class for investors in 2024. Investment grade is likely to benefit in particular from strong yield levels, manageable supply and still-decent fundamentals. (High yield will likely be overshadowed by potential refinancing issues, however.)

 

Equity markets can interpret the likely restrained fall in rates in various ways. If it is seen as a symptom of economic resilience (rather than intractable inflation fears keeping policy tight), then the implications for equities earnings and the asset class as a whole should be positive – on the assumption, of course, that the expected economic slowdown is not too deep or prolonged. As a result, 12-month equity market returns may be reasonable (high single digits) if not great. 

 

Investors also need to look forward to the risks and opportunities provided by ongoing structural economic change. Technology is both a future driver of such change and a current investment focus as investors try to anticipate longer-term trends. Environmental concerns are also forcing us to rethink the economic status quo and how to manage and finance the transition to a more sustainable economy. The energy transition is already showing how these two issues of technology and the environment are closely intertwined – a relationship that also runs through our other long-term investment themes, discussed later in this outlook.

 

We hope that this annual outlook therefore provides a useful analysis of the broader issues affecting investors over both short and longer-term time horizons. As noted above, there will be investment opportunities (many growth-dependent) but immediate challenges and structural economic change will make it even more important that portfolios are managed carefully. We look forward to providing you with assistance here, now and in coming years. 

Christian Nolting 

Global CIO 

(Geo)politics – Power play
2024 investment themes

(Geo)politics – Power play

Domestic political developments are increasingly shaping foreign policy agendas – and 2024 will be the biggest election year in history.
Economy – Investing creates potential
Theme #2

Economy – Investing creates potential

Expect only moderate growth in industrialised economies in 2024. The long-term challenge remains the delivery of investments to enhance economic competitiveness and fight climate change.
Inflation – Stage victory
Theme #3

Inflation – Stage victory

Inflation is moderating but will stay above central bank target levels in 2024. This battle will take time to win.
Bonds – Real rates matter
Theme #4

Bonds – Real rates matter

Higher yields have put bonds back centre-stage for investors – and investment grade could be the star. Prefer corporates over government bonds due to yield pick-up and sound fundamentals.
 FX – Be careful what you wish for
Theme #5

FX – Be careful what you wish for

Probably not a big year for FX moves, but the underlying reasons for currency strength will stay important: it’s not always beneficial.
Stocks – Growth comes at a price
Theme #6

Stocks – Growth comes at a price

Robust earnings growth is expected globally in 2024. Expectations of higher rates for longer may however put a lid on valuations expansion.
Sectors – Banking on tech
Theme #7

Sectors – Banking on tech

U.S. growth stocks are probably still the way to go for the long term. European and Japanese financials could appeal too, as well as consumer discretionary, industrials and energy.
Commodities – Terms of trade
Theme #8

Commodities – Terms of trade

Oil prices likely to rise, despite only moderate economic growth. Supply/demand impact more evident for industrial metals.
Alternatives – Asset-backed value
Theme #9

Alternatives – Asset-backed value

Still plenty of reasons to like alternatives, which may also be a good source of portfolio diversification. Infrastructure has many merits.
ESG – We are in this together
Theme #10

ESG – We are in this together

ESG investment has gone mainstream, with performance implications. Energy transition may point the way to investing in the sustainable economy.
Risks – De-risking risks
Theme #11

Risks – De-risking risks

Be aware that measures to create stability may just create new risks. Rates are still on our radar.
Portfolio – Balanced bull
Theme #12

Portfolio – Balanced bull

The longer-term focus has to be on growth. Reconsider bonds, monitor equity risks and always diversify.

Download our Perspectives annual outlook

Our full investment magazine "Annual Outlook 2024: Finding growth" is available to download. Please refer to the Important Notes at the end of the report for disclosures and risk warnings.

PDF

Language:

In Europe, Middle East and Africa as well as in Asia Pacific this material is considered marketing material, but this is not the case in the U.S.

The value of an investment can fall as well as rise and you might not get back the amount originally invested at any point in time. Your capital may be at risk.

No assurance can be given that any forecast or target can be achieved. Forecasts are based on assumptions, estimates, opinions and hypothetical models which may prove to be incorrect. Past performance is not indicative of future returns. Performance refers to a nominal value based on price gains/losses and does not take into account inflation. Inflation will have a negative impact on the purchasing power of this nominal monetary value. Depending on the current level of inflation, this may lead to a real loss in value, even if the nominal performance of the investment is positive.

This web page is not an offer to buy a security or enter into any transaction. The products, services, information and/or materials contained within these web pages may not be available for residents of certain jurisdictions. Please consider the sales restrictions relating to the products or services in question for further information. Deutsche Bank does not give tax or legal advice; prospective investors should seek advice from their own tax advisers and/or lawyers before entering into any investment.

Change of name: As part of Deutsche Bank’s Private Bank, the former International Private Bank also adopted this title on July 20, 2023.