Planning to buy S&P/ASX 200 Index (ASX: XJO) stocks in 2024?
If next year shapes up anything like this year, there could be some sizeable gains on offer.
Despite plenty of ups and downs along the way, the ASX 200 has gained 8.0% year to date.
But that doesn't tell the full story, as it excludes the dividends paid by many ASX 200 stocks.
If we add those back in, you'll see that the S&P/ASX 200 Gross Total Return Index (ASX: XJT), which includes all cash dividends reinvested on the ex-dividend date, is up 12.5% so far in 2023.
As for 2024, Commonwealth Bank of Australia (ASX: CBA) chief economist Stephen Halmarick notes that, "2024 will have more than its fair share of risks and challenges, particularly geopolitical risks as well as the United States presidential election."
But that doesn't preclude another good year ahead for ASX 200 stocks.
"Despite these obstacles, the Australian economy remains in relatively good shape," Halmarick said.
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ASX 200 stocks could benefit from lower rates in 2024: CBA
Earlier this month, the Reserve Bank of Australia (RBA) opted to keep the official cash rate on hold at 4.35%. Although that pause was widely priced into the markets, the ASX 200 gained in the wake of the RBA's announcement.
And according to CBA's forecasts, ASX 200 stocks could enjoy some late 2024 tailwinds.
CBA is forecasting that the RBA will start cutting interest rates in September, lopping 0.75% off the official cash rate by year-end. CBA also expects to see the US Federal Reserve begin to reduce rates next year.
The big bank thinks the RBA will then cut rates by another 0.75% in the second half of 2025.
According to Halmarick:
The good news is that the pace of global inflation clearly began decelerating around mid-2023 and we expect further deceleration in 2024. However, markets will also focus on the balance between returning inflation to 2% targets, without doing too much damage to labour markets.
CBA forecasts that employment growth will remain positive. Yet, despite a slowdown in net migration, an increase in the working-age population is expected to see unemployment tick higher to 4.5% by the end of 2024.
CBA believes the annual rate of inflation will fall back to 3% at the end of 2024.
And ASX 200 stocks involved in areas working to combat climate change could see some extra capital heading their way.
"Global capital will need to continue to flow into markets and industries that can help the world move towards the net zero carbon target," Halmarick said.
