icon
icon
icon
icon
🏷️$300 Off
🏷️$300 Off

News /

Articles /

Equity Markets Lower as 2024 Draws to Close: Navigating Geopolitical Risks and AI Sentiment

Theodore QuinnTuesday, Dec 31, 2024 3:53 pm ET
5min read


As the year 2024 winds down, equity markets have been grappling with a mix of geopolitical tensions, trade protectionism, and shifting AI sentiment. The first half of the year was characterized by strong headline returns, low volatility, and persistent mega cap tech leadership. However, recent macroeconomic and geopolitical developments have raised concerns about the sustainability of these trends.



Geopolitical tensions have been steadily rising, with global geopolitical risks reaching highs not seen in more than a decade (Figure 1). This increase in geopolitical risks has disproportionately impacted globally exposed firms, particularly those in sectors with significant international operations or supply chains. For instance, the US-China trade dispute has led to increased tariffs and other barriers, making it more challenging for companies to operate and profit in these markets. This has resulted in companies announcing reshoring activities, bringing production, supply chains, and other business operations back to domestic locations (Figure 2). This trend has been particularly evident in industries such as manufacturing and logistics, where companies are seeking to reduce their exposure to geopolitical risks and increase domestic self-sufficiency.

Investors have adapted their portfolios to manage geopolitical risks by focusing on companies that are building domestic self-sufficiency and managing geopolitical risks. One strategy that has been effective is reshoring, or bringing production, supply chains, and other business operations back to domestic locations. This trend has been steadily rising, with around 350,000 company announcements related to reshoring jobs in 2023 (Figure 2). Additionally, investors have been using large language models (LLMs) supplemented with granular text analysis and alternative data to build a comprehensive basket of exposures. This analysis reflects a positive view towards domestic industrials, raw materials suppliers, and real estate companies, and a relatively more negative view towards internationally exposed manufacturers and logistics firms.



AI sentiment has been slipping, but it's still not at DotCom 2.0 levels. This shift in sentiment has led to a pullback in tech stocks, with the "Magnificent 7" (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla) experiencing five consecutive weeks of negative returns before rebounding. As of August 29, 2024, they had returned 34% year-to-date (Source: Bloomberg). The tech sector is at the intersection of AI and geopolitical fragmentation, with US tech companies generating nearly 60% of revenues overseas (Source: Bloomberg). This puts them at risk of geopolitical headwinds, such as the doubling of semiconductor tariffs to 50% by the US. However, supportive legislation like the CHIPS and Science Act of 2022, which invests nearly $53 billion in US semiconductor manufacturing, research, and development, can create a supportive backdrop for companies fostering US-centric technological innovation and production (Source: Morningstar).

stock code include apple(7)
stock code include amazon(7)
stock code include alaphabet(7)
stock code include nvidia(7)
stock code include meta(7)
stock code include microsoft(7)
stock code include tesla(7)
stock code include apple and stock code include amazon and stock code include alaphabet and stock code include nvidia and stock code include meta and stock code include microsoft and stock code include tesla(7)
2024's magnificent 7;closing price(7)
closing price(7)
market cap(7)
market cap;2024's magnificent 7(7)
Closing Price(USD)2024.12.31
Market Cap2024.12.31
589.541480.84B
422.743136.63B
408.241304.31B
250.733786.82B
220.922313.09B
191.372333.75B
135.083299.66B
Ticker
METAMeta
MSFTMicrosoft
TSLATesla
AAPLApple
AMZNAmazon.com
GOOGAlphabet C
NVDANvidia
View 7 resultsmore


As we approach the end of 2024, investors should remain vigilant to the potential risks posed by geopolitical tensions and shifting AI sentiment. While the broad stock market has shown resilience, individual sectors and stocks may be more vulnerable to these factors. By focusing on companies that are building domestic self-sufficiency and managing geopolitical risks, investors can position their portfolios to better navigate the challenges and opportunities that lie ahead.
Comments

Add a public comment...
Post
User avatar and name identifying the post author
Lydia wechther
01/01

As we approach Donald Trump's potential inauguration in 2025, there's growing buzz about crypto Bitcoin (BTC) potentially reaching its highest record yet _estimate range between $190k and $250k. If you look at historical patterns, BTC has shown significant surges during periods of political and economic shifts. This could be a prime opportunity for those new to crypto to start exploring.Timing is key, and with past performance as a guide, now might just be the perfect moment to get in. For more reach an expert which do better and understand the market conditions. Message her on.. Facebook catherine E. Russell

0
Reply
User avatar and name identifying the post author
McLovin-06_03_81
01/01
$AAPL -
0
Reply
User avatar and name identifying the post author
enosia1
12/31
$AMZN These Are The 5 Best Dow Jones Stocks Of 2024 Nvidia and Walmart are leading the pack among the best Dow Jones stocks, outperforming the index's overall 13% gain by a significant margin. The post These Are The 5 Best Dow Jones Stocks Of 2024 appeared first on Investor's Business Daily. https://www.stck.pro/news/AMZN/97277554/
0
Reply
User avatar and name identifying the post author
wodentx
12/31
$META dropped hard today, down by a significant margin. It's not looking good for Metaverse investors right now.
0
Reply
User avatar and name identifying the post author
Throwaway7131923
12/31
AI hype cooling, but still bullish on $MSFT
0
Reply
User avatar and name identifying the post author
ImplementEither7716
12/31
Geopolitical risks making my portfolio jittery, brb
0
Reply
User avatar and name identifying the post author
SnowShoe86
12/31
Geopolitical risks are the new norm. Time to hedge bets on domestic plays. 🤔
0
Reply
User avatar and name identifying the post author
NoBicDeal
12/31
Volatility is back, buckle up 🌪️
0
Reply
User avatar and name identifying the post author
fluffnstuff1
12/31
Geopolitical risks are like volatility - they create opportunity for savvy traders who know how to hedge.
0
Reply
User avatar and name identifying the post author
Powerballs
12/31
Focusing on resilience, diversifying like a pro.
0
Reply
User avatar and name identifying the post author
Straight_Turnip7056
12/31
Reshoring trend ain't slowing. More jobs and supply chain stability? Yes, please.
0
Reply
User avatar and name identifying the post author
ABCXYZ12345679
12/31
AI hype cooling off, but tech still a game-changer. Keep an eye on $AAPL's next move.
0
Reply
User avatar and name identifying the post author
FaatmanSlim
12/31
Reshoring trend got me thinking about domestic plays.
0
Reply
User avatar and name identifying the post author
MonstarGaming
12/31
Tech pullback created entry points, loading up
0
Reply
Disclaimer: The news articles available on this platform are generated in whole or in part by artificial intelligence and may not have been reviewed or fact checked by human editors. While we make reasonable efforts to ensure the quality and accuracy of the content, we make no representations or warranties, express or implied, as to the truthfulness, reliability, completeness, or timeliness of any information provided. It is your sole responsibility to independently verify any facts, statements, or claims prior to acting upon them. Ainvest Fintech Inc expressly disclaims all liability for any loss, damage, or harm arising from the use of or reliance on AI-generated content, including but not limited to direct, indirect, incidental, or consequential damages.
You Can Understand News Better with AI.
Whats the News impact on stock market?
Its impact is
fork
logo
AInvest
Aime Coplilot
Invest Smarter With AI Power.
Open App