Talk of a Santa rally already this year is premature, reckons Charles Stanley (LSE:CAY), though it does believe a pre-Christmas surge will start in earnest after the next US Fed interest rate announcement.
That occurs on December 14 and is predicted to see US interest rates rise by 0.5%, slightly less than the 0.75% increase seen in the prior four announcements, confirmation of which Charles Stanley (LSE:CAY) believes will act as a catalyst share buying.
“The US has clearly passed its peak of inflation, with price rises expected to moderate worldwide during 2023. This will allow the [US] central bank to be more measured in its assessment” stated Garry White, chief investment commentator at Charles Stanley.
Markets also prefer conditions where new policies cannot be introduced, adds Charles Stanley, and following a strong Republican mid-term election Joe Biden has lost any leeway he had to bring in new plans.
Once a rally does start, Stanley expects it to boost markets from the last week of December through to the second day of trading in 2024 and for it to be a strong tailwind for stock markets in keeping with a trend first observed in 1972.