Where to look for investment opportunities? Forecasts for the XNUMXth quarter [Download Ebook]

Uncertain times absolutely affect the sentiment on financial markets - from shares, through raw materials, to currencies. What might the last quarter of 2023 bring? OANDA TMS Brokers analysts - Łukasz Zembik and Wojciech Białek - analyzed market trends and present their forecasts for the coming months in free report that you can download here. What else will you find in the ebook?

The U.S. economy is still growing, but at a slightly slower pace

Federal Reserve raised key interest rates by 25 basis points in July. They are expected to remain at a high level for a long time. Even though the Fed did not change the parameters of monetary policy at the last meeting, it sent a "hawkish message" to the market. These events resulted in the appreciation of the dollar, a decline in stock indices and an increase in the yield of US Treasury securities.

However, economic growth in the US is starting to weaken and in the autumn and winter period it will be much worse than the result in the first half of the year. A mild recession is likely in the first six months of 2024.

Problems of the euro zone and China

On the other side of the Atlantic, the mood is not the best. The situation in industry is particularly critical, suffering from weak global demand and deteriorating price competitiveness caused by the appreciation of the euro. Meanwhile, interest rates increase EBC by a total of 450 basis points is currently slowing the economy in most euro area countries. The decline in price growth for food, non-energy goods and services was offset by a marked increase in energy prices. Forecasts indicate that the average annual headline inflation will amount to 2023% in 5,4 and 2,3% next year.

In China, we are observing a further economic slowdown. Many of the problems facing the Middle Kingdom are closely related to the collapse of the real estate market. China's GDP slowed to 0,8%. on a quarterly basis in Q2 2023. However, some interesting positive changes can be observed. The official PMI and Caixin indicators for August suggest that there are signs of stabilization in the manufacturing sector after months of weakness. There is also a visible recovery in services, which were drastically limited by the pandemic.

DAX has broken an important technical level

German DAX index has recently broken through the lower band of consolidation, where it has been for the past few months. Technically, this is a negative signal. The last days of September brought a slight recovery (we saw something like a "retest") and thus the index price approached this level again. The model range of this system is around 14 points. The index will probably head in this direction in the fourth quarter.

Situation on the crude oil market

Since June Petroleum the price increased by approximately 30%. However, the further growth potential of this raw material may be limited given the weakness of the global economy. Either way, it is becoming more and more realistic that the price per barrel will be around $100 again.

The increase in oil prices is still the result of the decision of Saudi Arabia and Russia to extend supply cuts until the end of the year. Recently, the Fed reinforced these expectations by raising its economic growth forecasts. These events have raised concerns that supply in the oil market will not be able to meet demand in the coming months. These concerns are further supported by relatively low inventories - in the United States they are down 13%. since their peak in spring.

These factors may cause the price of the raw material to continue to increase in the coming weeks. However, if the US economy slows down significantly in early 2024 (as indicated by official estimates), then this factor will no longer support the valuation of oil. Additionally, Saudi Arabia is likely to exit its latest production restrictions at the beginning of the new year. So we have 2 factors that show that the price may be under downward pressure again in about 3 months.