Back to blog

Shares are set to break records next year. The strength of the economic recovery and central bank policy will matter

Financial markets are facing a major expansion. Some experts and investment analysts think so. According to them, US and European stocks could surpass all-time highs next year. The current economic constellation in the developed world is said to be conducive to this. However, it will depend on how strong a recovery the economies of Western Europe, particularly in North America, can breathe. Equally important will be the policy of central banks, which in the last two years have focused primarily on curbing inflation, which the economically developed world last faced four decades ago.

Shares are set to break records next year. The strength of the economic recovery and central bank policy will matter

The main index of the New York Stock Exchange, the S&P 500, is expected to rise to five thousand points by the end of next year. Analysts of the American consulting company RBC Capital Markets think so, adding that the year 2024 should be marked by a bullish mood on the stock markets. If their words were to come true, the S&P 500 index would surpass by more than 200 points the current all-time high set at the end of 2021[1].

Phil Orlando, chief equity strategist at Federated Hermes, predicts a similar development for the New York Stock Exchange. "We think the stock will go up significantly. Over the past few months, the S&P index has risen from 4,100 to 4,500 points, and we believe this growth is on strong legs," Orlando said in an interview with Bloomberg.

The fact is that, at least since the beginning of November, fears about future developments have been gradually receding. The steadily declining inflation, which could finally return to the central banks' 2% target in many important countries next year after more than two years, has brought significant relief to the markets[2].

Monetary policy will be one of the main factors influencing the mood on the stock markets in the coming months. So far, it seems that both the US Fed and the European Central Bank will no longer raise their key interest rates.

This is good news for equities for two reasons: 1) monetary policy will not dampen liquidity, which is important for equities in the short term, and 2) monetary policy will not dampen investment activity, which is important for the development of the real economy and thus the fundamentals for equity markets. In other words, if money is no longer becoming more expensive, free liquidity will feed demand for financial assets and investment will contribute to economic recovery.

But two uncertainties are likely to remain. The first is the development of the military conflict in Ukraine. Although the financial markets seem to have become accustomed to war in the eastern part of Europe, a black swan in the form of a negatively surprising development may yet emerge. The second uncertainty is the state of the Chinese economy. Although major problems in the real estate and construction sectors have again been sparked, it is not impossible that problems will bubble to the surface over time. It will then depend de facto on the willingness of the Chinese ruling class to continue pumping money into banks that are closely linked to the real estate sector.

Overall, however, it is safe to assume that the economically developed world in particular is out of the woods. That is, assuming that another crisis does not emerge in 2024, which (like the covid, energy and inflation crises) no one can currently imagine.

-----

[1,2] Forward-looking statements are assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements do not guarantee future performance. Forward-looking statements, by their nature, involve risk and uncertainty because they relate to future events and circumstances that cannot be predicted and actual developments and results may differ materially from those expressed or implied by any forward-looking statements.

Warning! This marketing material is not and should not be construed as investment advice. Past data is not a guarantee of future returns. Investing in foreign currency may affect returns due to fluctuations. All securities transactions may result in both gains and losses. Forward-looking statements represent assumptions and current expectations that may not be accurate or are based on the current economic environment, which may change. These statements are not guarantees of future performance.CAPITAL MARKETS, o.c.p., a.s. is an entity regulated by the National Bank of Slovakia.

Read more

SK Hynix Hits New High as It Builds South Korea’s Largest Data Center

SK Hynix Hits New High as It Builds South Korea’s Largest Data Center

For SK Hynix, a manufacturer of state-of-the-art semiconductors from Korea, 2025 has so far been as successful as the previous one. This proves that last year's 30% rise in share price was not accidental and the company is doing everything it can to maintain the momentum.* The latest is the plan to build the largest data center in cooperation with Amazon, which has the potential to strengthen the 50% increase in the value of shares since April, even further.

Apple and the Foldable iPhone: Could It Set New Sales Records?

Apple and the Foldable iPhone: Could It Set New Sales Records?

The first news about the possibility of starting production of a foldable iPhone bypassed technology enthusiasts at the end of last year, but unfortunately at that time it was only preliminary information, without a broader basis. We are currently in the middle of 2025 and analyst Ming-Chi Kuo of TF International Securities, a renowned expert on the Asian supply chain, commented on the situation. According to him, production of the foldable iPhone is likely to begin as early as 2026. Investors should not miss it, as this novelty would potentially have a chance to push stagnant sales.

Meta and Scale AI: What Will Zuckerberg Gain From the $14 Billion Bet?

Meta and Scale AI: What Will Zuckerberg Gain From the $14 Billion Bet?

At the beginning of last week, the first speculations appeared on the market about one of Meta's largest investments, namely the acquisition of a minority stake in the startup Scale AI founded by Alexander Wang. Preliminary information was subsequently confirmed on Friday, which also led investors to think about the possible impacts. Will Meta be able to reach the very top of AI innovation thanks to the new collaboration, or are the expectations too high? Will we see a new absolute high for Meta's share price soon?

Looking to Diversify Beyond U.S. Equities? M2C Is Going Public!

Looking to Diversify Beyond U.S. Equities? M2C Is Going Public!

When in 1992 a group of students decided to establish a company with the aim of providing services, probably none of them knew that three decades later, the company would stand on the threshold of the Prague Stock Exchange and head to America. Mark2 Corporation, M2C, has moved from a simple Facility Management (FM) to a high-tech ecosystem of services, which today operates in 13 countries in Europe, is expanding to the Middle East and the United States, and is preparing for an initial public offering (IPO) that you will soon be able to use.