2024 Outlook: A year of fragmentation

What we already know about 2024 is that it will be a year of celebration at the Paris Olympics, of reflection on the 80th anniversary of D-Day, and of ambition with audacious space missions preparing for lift off.

But when it comes to financial markets, the key consideration isn’t so much about ‘lift off’ but rather the ‘landing point’ for the global economy.

Our 2024 investment views

Inflation dominated conversations in 2022 and 2023, and this year is very much about the consequences of central banks’ efforts to tame inflation through higher interest rates – and to what extent those policies have slowed the pace of economic growth.

2024 is also looking to be a year fragmentation with opposing, though generally slowing growth paths across various regions. The fragmented environment entering 2024 points to the need for a more defensive asset allocation at the start of the year. However, there may be opportunities to take on more risk later in the year when, or if, the US Federal Reserve (Fed) starts to cut rates.

Macro views

The macroeconomic picture suggests a gradual weakening of global growth, while inflation is likely to slow but remain above central banks’ targets.

A mild recession is expected in the US in the first half of the year as the impact of higher rates finally starts to bite, and we anticipate inflation moving closer to target in the second half of the year. In the Eurozone, we project lacklustre growth rather than a recession, as the labour market is tight and disposable household income looks set to improve across the year, providing a floor to consumption. Further afield, in Japan we believe the economy will start to decline but is likely to stay above trend. 
Emerging markets (EM) look to be more resilient across the board. With regards to China, we observe a structural shift towards more sustainable but lower economic growth.

On the political front, dozens of national elections are scheduled for 2024 including US presidential elections. Other key votes will take place in India, the UK, Russia and Ukraine, along with many others across the globe. Our outlook also assumes that energy prices will remain contained and that recent geopolitical risks will be confined to specific regions.


Source: Amundi Institute

Investment pathways

Whilst an investor’s portfolio allocation will depend on their attitude to risk as well as their investment goals and time horizons, we believe there are a few investment pathways available for consideration. 

We favour a conservative start to the year, with fixed income set to play a crucial role in portfolios. Within equities, we maintain a defensive stance but foresee potential opportunities to rotate to a more risk-on approach if and when the US Federal Reserve starts reducing rates. 
EMs could be a key pillar of investing in 2024 and beyond, with potential opportunities in Asia and commodity-rich countries such as Brazil, which are increasingly instrumental to green energy and decarbonisation efforts. 

We also believe investors  should consider adding a responsible dimension to their investments: While the energy transition remains the top focus, additional themes are gaining traction and could deliver long-term value. Gold and other commodities could play a role as a buffer against geopolitical risks and inflation.

Investment outlook by asset class.

Futurist image with a graph


Amid slowing growth and weakening fundamentals, consider a defensive stance in equities during the first part of the year focussing on dividends, quality, value as well US equal-weight exposure. In addition, defensive sectors such as Healthcare and Staples, along with Japanese equities which may benefit from recovery in domestic demand, an accommodative central bank and regulatory steps to improve corporate governance. Look for resilience in developed market equities and consider sector rotation. Reconsider emerging markets as a key performance engine.

A possible reduction in Fed policy rates later in the year may provide opportunities to take on more risk. Beneficiaries of this policy switch may include US small caps in addition to cyclical sectors such as Financials and Consumer Cyclicals. Look also to emerging markets which have proven resilient despite fragmentation. In particular, we see opportunities in Asia and also Latin America where valuations appear attractive. China looks set to emerge as a “winner” on technology disruption and maintaining a standalone allocation to China from the rest of the EM block may allow to capture the full opportunity set of this unique economy.

Graph with numbers

Fixed Income.

Interest rates have likely peaked but are likely to remain higher for longer amid elevated inflationary pressures. Now may therefore be a good time to increase exposure to longer maturity bonds, as these will likely benefit the most from a possible decrease in rates much later in the year. To this end we see attractive valuations in US treasuries and EUR government bonds.

Within credit, we believe slowing economic conditions will impact corporate fundamentals and support a case for higher-quality credit over high yield. In particular we observe opportunities in US and Euro investment-grade credit. 

Sand with lights


Thematic strategies, which focus on longer-term, global structural trends, are expected to gather more momentum in 2024 and beyond. They offer investors the potential to capture future trends and capitalise of future growth as well as diversification away from today’s biggest companies, which are systematically preferred by market-cap-weighted indices.

We observe potential opportunities in megatrends such as robotics and artificial intelligence, alternative energy sources and new energy technology.

Abstract lights

Responsible investment.

A huge amount of investment is required to meet the goals set out in the Paris Agreement, a shortfall that could provide significant opportunities for investors. We favour strategies focussed on financing the energy transition in addition to long-term portfolio decarbonisation.

​​​​​​​This includes Paris-aligned benchmark (PAB) strategies, designed to meet the 1.5 degrees pathway outlined by the Paris Agreement.

Commodities Outlook


Heightened geopolitical tensions have led markets to search for safe havens, notably gold.

​​​​​​​The conflict in the Middle East also adds to the upside pressure on oil prices. We expect high short-term volatility in oil, rising dispersion in metals and modest upside potential in gold.

The class of 2024

As economic growth slows and uncertainly swirls, here's how different asset classes are expected to fit in to the investment universe through the years.

          Source: Amundi ETF

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