Private equity is sitting on a record stockpile of cash, primed for investment, but facing a dearth of suitable opportunities. This "dry powder" mountain, up 8% in a year, reflects a 2022 slowdown in dealmaking, according to S&P Global Market Intelligence and Preqin data, where inflated expectations from prior boom years are colliding with a softer economic climate. With private credit also swelling to $1.3 trillion, the hunt for attractive targets is set to intensify in 2024, potentially reshaping allocation strategies and deal types across the industry.
EQUITY
Wall Street continued its upward march on optimism for lower borrowing costs, while the broader market saw mixed performance, with tech giants like Apple and energy stocks surging on a Buffett-backed boost. However, whispers of a potential pause or correction linger, as some analysts caution against excessive exuberance in a market that has already climbed significantly. Solar energy stocks gained on COP28 renewable pledge.
GOLD
Gold prices poised for a weekly gain, buoyed by a dovish shift from the Fed. With interest rate cuts now on the horizon in 2024, the dollar weakened and Treasury yields dipped, fuelling demand for the safe-haven metal. Markets priced in a 70% chance of a rate cut as early as March. While the short-term risks of a yield reversal remain, gold's long-term outlook brightens as the Fed paves the way for lower borrowing costs next year.
OIL
Oil prices ended a seven-week slide on Friday, buoyed by the Fed's dovish pivot and an IEA's better demand outlook. A weaker dollar further eased headwinds, although China's mixed economic data and OPEC+ supply uncertainties kept gains capped. Overall, oil markets found cautious optimism as they looked towards a potentially brighter 2024.
CURRENCY
The dollar languished at four-month lows as investors sought riskier assets, pushing the Australian dollar and Japanese yen to multi-month highs. Meanwhile, China's stimulus measures and positive economic data offered some support to the yuan, and next week will be Japan's crucial meeting that might yield clues for its future fiscal policy.
