Market Outlook: Morgan Stanley lists 10 surprises that may affect global equities in 2024

livemint.com:

global market macros in the coming year, foreseeing another positive period. This optimism is grounded in expectations of interest rate cuts by the Federal Reserve and a resilient performance from the US economy, avoiding a hard landing.

However, it cautioned that despite the positive outlook, challenges and uncertainties may persist, indicating that the journey ahead for emerging markets may not be without obstacles. After three weeks of client meetings, the brokerage has identified ten potential surprises, whether positive or negative, that could significantly impact the global markets in 2024.

However, one must note that these surprises pose the risk of introducing unexpected developments that may have far-reaching effects on various financial landscapes, warned the brokerage. In 2023, the most significant surprise was not the avoidance of a US hard landing but the unexpected absence of a soft landing as well.

Contrary to expectations, the economy neither landed nor found the soft landing strip, which was perceived as a mirage in the end, stated MS. According to the brokerage, the concept of a soft landing had been viewed with skepticism by investors, resembling a belief in "this time is different," considered four of the riskiest words in finance.

Despite the lack of substantial evidence supporting the soft landing narrative, it gained consensus for the year ahead. Looking forward to 2024, the potential major surprise could be the arrival of the elusive hard landing, catching most investors off guard just after they concluded that "this time was indeed different." While it took the better part of the previous year for the consensus to fully embrace the soft landing narrative, the reversal to a hard landing may happen