Mid-year review: 2024 predictions

• Bitcoin hit new record high earlier this year, as predicted
   
• USDJPY still defying gravity, now highest since 1986
   
• JD.com soared over 70%, beating Nvidia, before tumbling

Markets entered this year with several major assumptions.

The main hope was for the Fed to cut interest rates as soon as March 2024, with as many as six rate cuts (150 basis points) throughout the entire year.

Fast forward to today, and the Fed has yet to cut even once.

Many investors and traders worldwide have been wrong-footed by the Fed’s surprisingly hawkish stance in keeping interest rates higher-for-longer.

We were no exception.

In the spirit of transparency and accountability, we now review the potential opportunities previously highlighted at the onset of 2024:

1) Bitcoin posted new record high, as expected

6 months ago, we cited the prospects of Bitcoin reaching a new record high.

And it duly delivered!

What’s happened since?

The world’s oldest and largest cryptocurrency posted never-seen-before levels and hit an all-time (intraday) high of $73,850 on March 14th, 2024.

This new record came just two months after the widely hyped Bitcoin exchange-traded fund (ETF) was launched in the US.

However since then, it has been moving sideways in a wide range between $72,000 - $57,000.

This sideway move is being largely attributed to the Fed’s surprisingly hawkish stance, maintaining its benchmark rates at its highest levels since 2001.

Higher-for-longer US interest rates have sapped some of the sorely-needed market liquidity that’s central to cryptos soaring even higher.

However, with another 6 months to go, Bitcoin may post even greater heights, provided the Fed can proceed with its intended rate hikes later this year.

At the time of writing, Bitcoin remains about 44% higher so far this year.

2) USDJPY continues to defy gravity

As the new year kicked off, we wondered whether 2024 would be the "year of the rebound" for the Japanese Yen.

Answer: Not in the slightest.

What’s happened since?

By mid-January 2024, the Japanese Yen had swiftly unwound all of its 5% gains against the US dollar from December 2023.

For much of 1H24, the Yen has been in a freefall with USDJPY now trading around its highest levels since 1986.

Along with the Fed’s hawkish stance, the Bank of Japan (BoJ) has only moved at a glacial pace towards normalising its policy settings, despite ending its negative interest rates regime with a 10-basis point hike back in March 2024.

This contrasting policy stances between the Fed and the BoJ has lent itself to a still-strong US dollar, and an ailing Yen, i.e. surging USDJPY.

Although markets are still currently predicting two more BoJ rate hikes by year-end, with a 58% chance forecasted for another hike by end-July, we are forced to abandon our forecast of USDJPY reaching 137, which now seems a world away.

3) JD.com disappoints on lacklustre Chinese economic recovery

At the onset of 2024, we asked the question, “JD.com to outperform on China recovery?”

Answer: Initially, yes, but has been disappointing since.

What’s happened since?

The US-listed shares of JD.com – a major e-commerce platform in China – had soared as much as 71% between its year-to-date low in mid-January, through its 2024 high in mid-May.

That ascent put this stock well on its way towards the stated $43.56 price target.

JD.com's 71% surge between January 22nd and May 17th even outpaced the 59% gains for Nvidia – the star performer on the US stock market - for the same period.

Such a stellar performance by JD.com filled us with initial hope that this would indeed pan out to be a tremendous opportunity.

Unfortunately, that was not to be.

So far this year, Beijing has been reluctant to unleash the broad-based support for its economy.

Hence, with domestic demand being deprived of the boost it desperately needs, that has weighed on online spending, and prompted JD.com to unwind all of its year-to-date gains.

To be clear, Wall Street still predicts some 57.7% in future potential gains for JD.com, potentially hitting $41.42 in 12 months from now.

However, until Beijing truly rolls out bigger stimulus measures to aid the spending of Chinese consumers, Chinese stocks may persist with its sluggish performance in the interim.

Global investors will also be well aware of the threat of a more intense trade war between China and western democracies, especially if we see a return of President Trump to the White House.

Still, the second half of 2024 promises more shorter-term opportunities ahead.

Be sure to follow our Daily Market Analysis for more ideas and potential opportunities across global financial markets.