Denmark’s PFA has predicted positive returns for 2024, with its chief strategist, Tine Choi Danielson, believing that there is a “reason for optimism”.

Choi Danielson highlighted interest rate freezes, decreasing inflation and continued progress in key economic figures as reasons to be positive about the year ahead.

"All things being equal, we are in a better position now than we were a year ago. Inflation is still slowing and economic growth remains fairly robust – especially in the US, which is the biggest engine of the global economy. And although growth in many countries in Europe is very low or stagnant, this has not yet led to rising unemployment,” Choi Danielson explained.

“At the same time, falling inflation means that consumers have had an increase in real wages and can thus keep private consumption going. If that picture continues, then I think there is room for further share price increases in 2024.”

However, while the macroeconomic trends generally look reasonable, Choi Danielsen emphasised that we must not forget that threats to the economy can also come from outside. She cited the Covid pandemic and then Russia's war against Ukraine, which caused energy prices to rise sharply, as examples.

Most recently, the tragic conflict in the Middle East; although it has not yet left a deep mark on the global economy, it is contributing to increased geopolitical unrest, which, according to Choi Danielson could become a significant theme in 2024.

"2024 will be an unusually busy election year with presidential elections in, for example, the USA, India, Russia and Taiwan as well as elections to the European Parliament. Normally, political events do not have a big effect on the markets, but in a situation like now with wars in the Ukraine and the Middle East and trade tensions, political uncertainty can give rise to unrest in the markets,” she explained.

“The less predictability, the more unrest it will typically cause. So, a new term with Trump at the helm will certainly be able to cause swells. Because in addition to the foreign policy themes, there will also be a sharp eye on the economy, as the US, despite record high employment and solid growth in 2023, has seen the national debt grow to new heights.”

She sees the build-up of debt in both the US, Europe and China as one of the major long-term threats to the economy, as it gives less political leeway to kick-start the economy if growth slows down.

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