S&P/ASX 200 Index (ASX: XJO) shares are, on the whole, in the green on Monday, with the benchmark index up 0.1% in late morning trade.
That's a welcome shift from last week, which saw the ASX 200 close the first four trading days of 2024 down 1.3%.
Much of the pressure on ASX 200 shares last week came from the United States.
That followed the release of the Federal Reserve's minutes from the central bank's December policy meeting.
While most FOMC members believed the improving outlook for inflation would lead to lower interest rates in the world's top economy, the minutes indication that this relief might not arrive until "the end of 2024" saw US markets slide.
That's because many analysts and investors had been expecting the Fed to start cutting rates at the upcoming March meeting.
With a bit of time to reflect on those minutes and the latest US job's data released at the end of last week, here are what some top experts expect from the Fed in 2024.
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When can investors in ASX 200 shares expect relief from the Fed?
Like it or not, many ASX 200 shares are susceptible to interest rate levels in the US.
And the jobs data released last week showed a resilient US labour market, with wages increasing above consensus expectations.
This sees some top analysts forecasting that investors will indeed have to wait until later in 2024 to see the first rate cuts from the Fed. But others remain optimistic that the first rate relief for markets is on the way in March.
Morgan Stanley counts among those that believe investors in ASX 200 shares will need to be patient when it comes to any pending rate cuts.
According to Morgan Stanley (quoted by The Australian Financial Review):
We do not think the labour market is showing the slowdown needed for the Fed to cut soon and think a bumpy path ahead on inflation will keep the Fed from cutting before June, when we expect the first 25bp cut.
Wells Fargo is largely in agreement. Its analysts said they doubted that the latest US "employment report moves the needle much" for the Fed.
"We suspect it will keep the policy rate unchanged over the next few meetings as it looks for additional confirmation that inflation has come down on a sustained basis," Wells Fargo said.
In a more uplifting assessment for investors in ASX 200 shares, Bank of America wasn't put off by the rather strong US jobs report.
According to its analysts (quoted by the AFR):
On net, we think the signal from the employment report is one of gradual cooling despite the beat in headline payrolls. This supports our view that the labour market is coming into better balance, and income growth continues to support spending.
As for when ASX 200 shares might get a boost from a Fed rate cut, Bank of America said, "We retain our view that the Fed will begin a gradual easing cycle starting with a 25bp cut in March."
Goldman Sachs also expects the Fed to begin easing in March, and then some.
"We continue to expect three consecutive 25bp cuts in the Fed funds rate in March, May, and June on the back of lower core inflation, followed by quarterly cuts to a terminal rate of 3.25-3.5%," Goldman Sachs said.
