The S&P/ASX 200 Index (ASX: XJO) has had a volatile time this year, as we can see on the chart below. In this article, we're going to look at what some experts think may happen in 2024 for the benchmark index.
An index return is made up of the returns of the underlying businesses such as BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), CSL Ltd (ASX: CSL), Fortescue Metals Group Ltd (ASX: FMG), Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ).
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Expert view
According to reporting by The Australian, Morgan Stanley has a 12-month price target of 7,350 points for the ASX 200 Index, which implies a possible rise of 3.5%, plus the potential dividends and franking credits.
This expectation of possible capital growth for the ASX 200 comes despite the expectation of an economic slowdown. Morgan Stanley Australia strategists led by Chris Nicol said:
The next six months should see fuller effects from the final phase of a monetary hiking cycle affecting domestic-focused earnings
Industrial earnings may be hurt, particularly in the first half of FY24, but Morgan Stanley thinks industrial company earnings will "base out" and there will be "clarity on the depth and shape of the economic cycle improvement."
The investment bank also acknowledged that it had been too pessimistic about US corporate earnings this year amid all of the interest rate rises.
Morgan Stanley believes there are positive signs for ASX mining shares thanks to higher commodity prices and a weaker Australian dollar.
Based on that, Morgan Stanley's model portfolio has larger positions in insurance, ASX energy shares, BHP, Rio Tinto Ltd (ASX: RIO) and ASX healthcare shares.
What sectors is the investment bank avoiding? ASX bank shares, real estate investment trusts (REITs), housing and ASX retail shares.
ASX 200 snapshot
In 2023 year to date, the ASX 200 has gone up by 2% and it's virtually flat over the past year.
