The reporting of many listed companies since mid-January shows a picture of moderate sales growth. Thanks to high profitability, there were nevertheless increases in profits. In the USA, for example, this was five per cent in the 4th quarter compared to the previous year.
Most companies find it challenging to venture a forecast for 2024. As a result, the disparity between the cloudy business climate and continued strong consumer spending is widening, particularly in the US.
Record highs possible thanks to IT
At sector level, however, it can be seen that the IT sector has a positive outlook. This applies in particular to companies focussing on artificial intelligence (AI). Due to the increasing breadth and unbroken price momentum, this development could drive the market further forward. This is despite the fact that new long-term highs have just been reached. Based on these premises, we are increasing the equity allocation to a slight overweight in the short term. On the other hand, we are reducing global bonds in view of the very optimistic consensus expectations regarding inflation and interest rate cuts.
Nevertheless, we are sticking to our base scenario and remain sceptical as to whether the Goldilocks scenario with a soft landing, monetary policy easing and a ten per cent increase in earnings in 2024 will continue undisturbed into the coming summer.