Cross Asset Investment Strategy - February 2024

Japan equity: top performer in 2023; remains attractive option for 2024

Three key arguments support the Japanese market: 1) a recovery in profits; 2) a strong incentive from the Tokyo Stock Exchange for companies to improve their capital efficiency; and 3) the shift out of deflation is boosting a market rerating. Risks to these positive arguments are mostly linked to the Yen, especially if it were to rise. Not hedging the Yen in 2024 could therefore be an attractive option.

• Macroeconomic focus: Red Sea: a new supply chain and inflationary shock in the pipeline?
• Emerging markets: China & India
• Macroeconomic snapshot
• Central banks watch: EM and DM Central Banks are being prudent in the short term
• Geopolitics: Ukraine will face a difficult 2024
• Policy: European defence at a crossroads
• Scenarios and risks 
• Amundi Investment Institute models: Liquidity-Adjusted Valuation for S&P500
• Infographic - Markets in charts: Equities & Bonds
• Commodities: Gold still in the waiting room
• Currencies: A lack of credible alternatives to the USD in H1

A challenging rate-cut path for central banks

Markets are reassessing central bank (CB) policy paths amid slowing inflation and a potential economic slowdown but resilient historic data. The speed of disinflation, however, could be affected by tensions in the Red Sea, particularly for Europe. Thus, CBs job is getting difficult as they aim to maintain rates at a restrictive level for the right duration.

February 2024