Q2 2024 market review: key insights and predictions

As we approach the end of the second quarter of 📅2024, it's an opportune moment to take stock of the market's performance and examine the key trends that have shaped the financial landscape. This quarter has been marked by a series of notable developments, both positive and challenging, that have had a significant impact on investors and the global economy.

Global equity markets have demonstrated remarkable resilience, delivering solid gains and building upon the impressive rebound witnessed over the past year. This positive momentum has been fueled by encouraging signs of improvement across various geographies and a robust consumer backdrop in the United States. However, the quarter has not been without its challenges, particularly in the bond market. Rising U.S. Treasury yields have put downward pressure on bond prices, as investors grapple with increasing inflation expectations and higher inflation-adjusted borrowing costs. This has led to concerns that the U.S. Federal Reserve may maintain interest rates at elevated levels for longer than initially anticipated.

Amidst these market dynamics, we have observed several key milestones in the performance of specific asset classes. Notably, both equities and gold have reached significant highs, while oil prices have remained relatively stable, showing no substantial changes.

In this comprehensive Q2 2024 Market Review, we will delve into these crucial developments, providing in-depth analysis and insights to help investors navigate the complex financial landscape.

Stocks

The stock market experienced a mix of highs and lows during the second quarter of 2024, with major indices such as the 📊Dow Jones, S&P 500, and Nasdaq reaching local peaks in mid-May. However, when considering the entire period from April 1st to the end of June, these indices remained relatively unchanged, with a divergence of just over 2%. The fluctuations can be attributed to the Federal Reserve's decision to halt the rapid reduction of interest rates, which had a moderating effect on the market's momentum.

Despite the overall stability, the quarter witnessed several significant moments in the stock market. Adobe shares surged by an impressive 17% in extended trading on Thursday following the design software maker's report of earnings and revenue that surpassed estimates, along with an upward revision of its full-year guidance. This news brought optimism to investors and showcased the company's strong performance and positive outlook. Another notable event was Nvidia's announcement of a 10-for-1 stock split during its earnings report in late May. Investors welcomed this move, as stock splits make high-flying stocks more accessible to a wider range of buyers and demonstrate the company's confidence in its future prospects. In the two weeks leading up to the split, Nvidia's shares climbed by nearly 30%, reflecting the market's enthusiasm. Furthermore, Cathie Wood's Ark Invest made a bold prediction, stating that Tesla's stock should reach 📈$2,600 within the next five years, indicating a bullish sentiment towards the electric vehicle manufacturer.

Overall, the stock market remains on a positive note, with investors closely monitoring the performance of individual companies and the broader economic landscape.

Forex

The foreign exchange market has been influenced by various factors in Q2 2024, with the US Dollar maintaining its strength and exerting pressure on major currency pairs. The Australian Dollar has been weakening against the firmer US Dollar, as the hawkish tone of the Federal Reserve and challenges in China's economic recovery weigh on AUD/USD. Investors are closely watching the upcoming Reserve Bank of Australia (RBA) interest rate decision, with economists surveyed by Bloomberg forecasting no change in the cash rate, which is expected to remain at 4.35% for a fifth straight meeting. The RBA's efforts to restrain consumer prices, underpinned by an ultra-tight employment market, have been a key factor in its monetary policy decisions. 

For AUD/USD, the key support level is expected to emerge at the 0.6580-0.6585 region, with a decisive break below this level potentially leading to a drop to 0.6510 and further downside targets at 0.6465 and 0.6400.

Meanwhile, 💶EUR/USD has been consolidating around the 1.0700 level, with mixed sentiment affecting the pair's performance. Political uncertainty in Europe continues to undermine the Euro and cap the upside, while the cautious mood acts as a tailwind for the US Dollar, favoring EUR/USD bearish traders. The pair has recently registered large losses and trades at its lowest level since early May, slightly below 1.0700. 

The negative shift in risk mood has helped the US Dollar gather strength, while the impact of soft inflation data on the USD has started to fade as investors reassess the Federal Reserve's policy outlook. Investors are also focusing on political jitters in the Eurozone, making it difficult for the Euro to find demand. 

The 💷Pound Sterling (GBP) has faced challenges against the US Dollar (USD) in Q2 2024, with GBP/USD struggling to maintain gains above the 1.2800 level. The pair reached a three-month high but faced rejection once again above this key threshold. The Pound Sterling's uptrend has been hindered by the resilient US Dollar, which has capitalized on the EUR/USD sell-off and the hawkish stance of the Federal Reserve.

Despite a softer-than-expected US Consumer Price Index (CPI) data, which bolstered expectations of Fed rate cuts, GBP/USD failed to sustain its gains. The pair reversed sharply following the Fed's policy meeting, where the central bank signaled only one rate cut in 2024, contrary to market expectations. The hawkish comments from Fed Chair Jerome Powell further supported the US Dollar's recovery, pushing GBP/USD below the 1.2800 level.

Looking ahead, the focus shifts to key economic data from the UK, including the inflation report and the Bank of England (BoE) interest rate decision. The UK CPI data for May and the BoE's policy verdict will be closely watched by investors, as they could provide fresh impetus for the Pound Sterling. Additionally, the UK Retail Sales data and the S&P Global Preliminary Manufacturing and Services PMI reports from both the UK and the US will be in the spotlight.

From a technical perspective, GBP/USD's failure to close above the 1.2800 level on a weekly basis has hindered the Pound Sterling's uptrend. A decisive break above this threshold could open the door for further gains, with the March 8 high of 1.2894 and the psychological level of 1.2950 being the next relevant resistance levels. 

Crypto

The cryptocurrency market in Q2 2024 has been marked by the emergence of promising altcoins and the continued dominance of Bitcoin, despite its slight price decline. Bitcoin, the world's leading cryptocurrency, experienced a 📉4% decrease in value from April 1st to the end of June, with its current price standing at $66,300. This minor pullback can be attributed to various factors, including market volatility and shifting investor sentiment.

Despite Bitcoin's modest decline, the crypto market has witnessed the rise of several notable altcoins that have captured the attention of investors. BlockDAG has emerged as a top contender, fueled by its recent Moon keynote, which showcased over 50 new development updates focused on enhancing speed, accessibility, security, and scalability. With a successful presale raising $49.5 million and an impressive 1120% surge in price, BlockDAG has positioned itself as a compelling investment opportunity. The launch of the X1 beta app for Android and Apple, along with partnerships and endorsements from reputable sources, has further solidified BlockDAG's potential in the blockchain technology space.

Other altcoins, such as Pepe, Toncoin, Solana, and Render, have also garnered interest from investors, each presenting unique challenges and opportunities. Pepe's price has experienced significant volatility, with buyers and bears battling for control, while Toncoin faces declining user demand and increased selling pressure. Solana has taken steps to address "sandwich" attacks and bolster network security, aiming to maintain its position as a top crypto pick for Q2 2024. Render (RNDR), despite its recent price decline, continues to provide profits for its holders and presents a potential buying opportunity for discerning investors.

As the cryptocurrency market continues to evolve, investors are closely monitoring the performance of these emerging altcoins and the overall market dynamics. While Bitcoin remains the dominant force, the rise of promising projects like BlockDAG and the unique challenges faced by other altcoins highlight the diverse landscape of the 💰crypto market in Q2 2024. As always, investors are advised to conduct thorough research and exercise caution when navigating this rapidly changing and often volatile market.

Commodity

The commodity market experienced varying trends in the second quarter of 2024, with energy prices showing mixed movements and metal prices rebounding. Natural gas prices declined in Q1 2024, with the European benchmark falling to nearly half its level a year ago due to sluggish industrial activity and favorable weather conditions. Throughout 2024, abundant production and inventories, along with the growing adoption of renewables and efficiency gains, are expected to keep natural gas prices in check. However, potential increases in consumption in the power and industrial sectors in response to lower prices, as well as lower US exports and higher demand from China and other Asian economies, pose an upward risk.

In the metals market, prices of key industrial metals started to rebound in Q2 2024, supported by a stable US economy and signs of recovery in China's economy. Reduced operational capacity of Chinese smelters also contributed to the price recovery, especially in the aluminum markets. Gold prices 🥇have surged in Q2 2024, driven by rising geopolitical uncertainty and purchases by central banks. According to the World Gold Council, central banks globally added 229 tonnes of gold to their reserves throughout 2023, with demand growth forecast to extend into 2024 as countries like China, Poland, and India further increase their gold reserves. However, the gold price trend for 2024 remains uncertain, as lower inflationary pressures could ease investors' demand for the precious metal.

Crude oil prices, after reaching a 6-month high in April 2024, eased significantly due to concerns about tepid global economic growth and increasing prospects of delayed monetary easing in major economies, which would further dampen consumer and industrial demand. Surging electric vehicle (EV) sales, particularly in Asia Pacific, Western Europe, and North America, are also expected to reduce oil consumption. While 🛢OPEC+ is expected to extend oil output cuts in June, any upside surprises in OPEC+ output and robust production outlook in non-OPEC countries could help ease global oil prices. The geopolitical situation in the Middle East remains a key factor to watch, as intensifying tensions or potential escalation could affect production and exports of oil and gas in the region and bring volatility to the energy market.

Conclusion

As we enter the third quarter of 2024, several key market predictions are expected to shape the financial landscape. The US Dollar (USD) is anticipated to continue its bearish trend, driven by factors such as cooling inflation and the absence of recession risks in the US economy. The Federal Reserve's inclination towards monetary policy easing and potential interest rate cuts further weakens the outlook for the USD.

Investors are optimistic about the rise of an AI-driven bull market, with AI technology stocks leading the charge. The technology sector boasts the highest return on invested capital (ROIC) among 🇺🇸US equity sectors, making it an attractive option for investors.

Despite ongoing concerns, investors remain hopeful about the Federal Reserve's ability to achieve a soft economic landing. Market sentiment suggests a high probability of rate cuts occurring sooner and more aggressively than initially anticipated, which could be favorable for stock prices.

The EUR/USD pair is expected to experience volatility due to geopolitical events, economic data releases, and central bank policies. Traders must closely monitor developments in Europe and the United States to navigate potential market shifts.

If inflation persists above 3% throughout 2024, a decline in US interest rates could benefit growth-oriented currencies, particularly growth stocks.

The Australian Dollar (AUD) is projected to appreciate against the USD, with estimates ranging from 0.70 to 0.78 by mid-2024. The Reserve Bank of Australia's policies and economic indicators will play a crucial role in this trend.

Analysts anticipate 👀further weakness for the British Pound (GBP) in the first half of 2024, followed by a potential reversal. The 10-year Treasury yield's rise to levels not seen since 2007 signals a potential currency strengthening, with projections of GBP/USD reaching 1.99 by the end of 2024.