2022 was a year of turbulence and uncertainty. As soon as the world recovered from the COVID shock, the Russia-Ukraine conflict started upsetting energy and commodity markets. As the year 2023 starts, recession fears are looming as inflation is high, and the Federal Reserve has indicated it’ll increase rates further to control it.
Amidst all this uncertainty and fear, investors are wondering what they should put their investments into. This article will explore the types of assets that’ll offer the most return on investments.
The Energy Sector
As mentioned in the introduction, the Russia-Ukraine war has shaken the energy markets and has resulted in massive price hikes. Due to the ban on Russian energy imports, Europe is struggling to meet its energy demands. As a result, energy players from other countries can earn big bucks.
A few crucial considerations about this sector:
- Most market watchers predict it’s going to become a multi-year bull market.
- Economic recovery in developing countries and growth in the Indian & the Chinese economy will keep demand high.
- Companies like ExxonMobil, Occidental, and BP have been recording impressive profits.
The Crypto Prediction
Last year was disastrous for crypto, with Bitcoin, the industry’s poster child losing 70% of its value. Several crypto brokers such as FTX, BlockFi, and Celsius Networks went through a bankruptcy, resulting in losses of billions of dollars to customers.
Here’s what to expect from the digital currency sector in 2023:
- SEC & CFTC might move to regulate the crypto market more robustly.
- More institutionalization of the market with more traditional customers taking part in it.
- Overall volumes will remain depressed because investors will be wary during a cautious rebuilding phase.
The Metal Sector
Early 2022 was a fantastic period for metal & mining because demand was high due to the constraints on supply chains and energy transition initiatives. However, the macroeconomic conditions deteriorated in mid-2022 and later, leading to weakened short-term demand.
Here’s what to expect from this sector in 2023:
- Gold prices are expected to rise, given a strong recovery in the Chinese economy.
- Global steel demand is anticipated to grow by 1% in 2023 from 1,796.1 Mt to 1,814.7 Mt.
The Stock Market
The year 2022 was choppy for the stock market, given the Russia-Ukraine war, monetary tightening by the FED, and recession fears. However, this uncertainty also presents an opportunity for intelligent dealers in the market.
- Most stock markets have the potential to attain moderate progress in 2023.
- The S&P 500 stands at 3900 for UBS and 4150 for KKR at the end of 2023.
- JP Morgan predicts the S&P 500 could hit 4200 by the end of 2023, thanks to a pivot from the FED.
The Tech Sector
The last quarter of 2022 saw some uncertainty in the tech sector, with Elon Musk taking over Twitter and layoffs in several US firms due to inflation and a shaky stock market. The NFT market saw a 90% drop by the end of 2022.
However, 2023 looks to be a different year:
- Overall, tech spending is highly likely to increase in 2023.
- The sector is expected to experience decent growth after a relaxation in Zero COVID Policy in China.
- The Artificial Intelligence (AI) industry will see an increase of 12% from 2022.
Although 2022 has been a little discouraging for most sectors, investors should always have a long-term view of the market, even if there are fears of a looming recession. It is always hard to make 100% accurate predictions about different markets and the economy in general. However, it is better to go for high-growth and low-volatility assets in 2023.
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