The tussle between the bears and the bulls has proliferated over the years, and 2023 would be no exception to it. Kavan Choksi mentions that the ever increasing tussle between the losses and profits in the stock market has seen no end, and similar trends are predicted for this year. Gaining a good understanding of the important stock market trends for 2023 is important for all investors, and would allow them to smartly use their money.
Kavan Choksi marks distinctive stock market trends to watch in 2023
Investors are likely to bank on well-established trajectories when it comes to the stock market trends to keep an eye on 2023. Due to the uncertainties in the economy due to factors like geopolitical disturbances and international relations, the demand and supply get imbalanced, leading to a price rise/fall in the economy. To control this situation, the central bank changes the interest rates to keep the economy running. Such interest rate fluctuations shall be among the governing factors in the global market trends in 2023.
The commitment of the Federal Reserve to attack inflation by raising the benchmark interest rate would fundamentally dominate economic discourses and broader markets, not just in the United States but also in the world. Hence, federal policies are among the important aspects to keep an eye on in 2023. Throughout 2022, the central bank aggressively smashed the accelerator of its tightening monetary policy. The associated rise in borrowing expenses must cool down inflation in theory. However, the hotter-than-expected November jobs report for 2022 suggested that policymakers still have some ways to go. The fact that there are still more dollars chasing after fewer goods can be a cause of worry for the market investors. The interest rates are likely to keep rising under this situation.
If there is one sector that has enjoyed consistently strong demand throughout the year of 2022, it would be the broader insurance sector. The Covid-19 crisis, the surge in serious car accidents and many other incidents provided a boost to the market, as a rise in volatile conditions incentivizes people to maximize their coverage. With a number of uncertainties on the horizon, things are unlikely to change in 2023. Hence, investors need to keep a close eye on this otherwise boring sector. Another point about the insurance segment focuses on inelastic demand. Regardless of the price fluctuations, companies that benefit from inelastic demand shall witness predictable and consistent sales influx. However, it is hard to figure out how this sentiment may change given the lessons learned from the pandemic.
As per Kavan Choksi, crypto pricing dynamics are likely to follow the same indices as the equities sector in 2023. Benchmark digital assets especially share a very strong statistical correlation with the real M2 money stock. Basically, as the money supply increases, crypto valuations also rise. However, as the money supply decreases, crypto does suffer losses. Hence, if credence is given to the crypto winter concept, then there is a chance that blockchain firms may suffer substantially in the near future.