Investment Institute
Weekly Market Update

Take Two: Global growth to ease in 2024; US Q3 growth revised up

  • 04 December 2023 (3 min read)

What do you need to know?

The global economy should slow amidst a backdrop of lower inflation and limited interest rate easing in 2024, according to AXA IM’s 2024 Outlook. Overall, we expect global GDP growth to reach 2.8%, down from an expected 3.0% this year but anticipate an acceleration in 2025 – back to 3.0%. The report outlines that despite the numerous challenges facing investors, there is reason for optimism. Bond yields have reached multi-year highs, priming them for potentially strong total returns. Equally, if interest rates and yields taper back – and growth continues - investors could see the positive equity momentum that has characterised 2023 continue.

Around the world

US third quarter (Q3) economic growth has been even more robust than initially thought, after GDP increased at an annual rate of 5.2%, up from a previous estimate of 4.9%. Increased government spending helped drive the upturn, but it was partly offset by consumer spending, which was revised down to 3.6% from 4.0%. Elsewhere, Canada’s economy shrank in Q3 at an annualised rate of -1.1% but avoided recession after Q2’s figure was revised up to 1.4%. Meanwhile Eurozone annual inflation fell more than expected in November, to 2.4% from 2.9% in October – close to the European Central Bank’s 2.0% target.

Figure in focus: $298bn

Global online spending reached $298bn during this year’s Cyber Week - the shopping period which includes Black Friday and Cyber Monday where consumers seek out bargains. This year’s total beat 2022’s tally of some $281bn and represents a 6% year-on-year increase – with growth driven primarily by order volume rather than inflation, according to Salesforce data. Artificial intelligence (AI) helped drive sales growth, with $51bn of Black Friday and Cyber Monday spending influenced by AI features such as targeted offers, product recommendations and generative AI chat services. Technology enabled further spending as 79% of Cyber Week’s e-commerce traffic was from mobile phones, up from 76% in 2022.

Words of wisdom

Loss and damage fund - Delegates at the United Nations climate change summit COP28 agreed to finance the proposed 'loss and damage' fund to help developing nations deal with the impact of climate change. The initial funding commitments totalled over $400m - with $245m from the European Union, including $100m from Germany, while COP28 host the United Arab Emirates has also pledged $100m. Pledges also came from the UK, US and Japan. However, the Organisation for Economic Co-operation and Development estimates more than $2trn is required to help the most vulnerable parts of the world. The fund was established at COP27 but without agreement on the funding details.

What’s coming up?

November’s final Purchasing Managers’ Indices (PMIs) covering China, the Eurozone and US are issued on Tuesday. On Wednesday, the US will publish its import and export data while the Bank of Canada announces its latest interest rate decision. On Thursday the Eurozone reports third estimates for Q3 GDP growth as well as updated unemployment data. China’s import and export figures are out on Thursday. On Friday, Japan will release final Q3 GDP growth figures. China announces its inflation rate for November over the weekend.

    Disclaimer

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

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