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Monthly summary – January 2024

Happy New Year! January turned out to be the third consecutive month with positive stock market returns overall despite investors’ initial hesitation. After the very strong finish in 2023, with November and December delivering bumper price increases, the new year however started off on a more apprehensive note. This was due not least to the push back from central bankers that market participants’ expectations of near-term rate cuts were too optimistic. However, as the month progressed, incoming inflation numbers combined with the benign macro statistics overall supported the notion of a possible soft landing accompanied by successively lower rates.

Rates untouched, but with expectations of upcoming cuts

Even though the Federal Reserve and the European Central Bank held their respective rates unchanged, the messages they conveyed clearly pointed towards upcoming cuts. The question of timing remained, which might have pushed the expected dates a little bit into the future, but the dovish direction was clear.

Reporting season in full swing

The Q4 reporting season kicked off on a fairly positive note, with earnings in most sectors in line with or better than the forecasts. Operating margins overall held up well, although order intake and forward guidance in many instances indicated uncertainty regarding demand in 2024. Against the backdrop of investors´ expectations of successively improved economic growth, these question marks were often given the benefit of the doubt.

No end in sight for wars in Gaza and Ukraine

The war in Gaza continued with no endgame in sight. Despite the hardline stance from Israeli prime minister Benjamin Netanyahu, both the US and the EU advocated a two-state solution as a prerequisite to end the fighting. Meanwhile, the conflict seemed on the cusp of spreading as Iran-backed militias lethally attacked US forces in Jordan while cargo ships in the Red Sea continued to be attacked. The former prompted president Biden to announce countermeasures in the region, while the latter caused shipping companies to redirect routes from the Suez Canal to around the Cape of Good Hope, a significant detour. Almost two years after Russia launched its full-scale invasion, the war in Ukraine continued albeit with neither side making any significant progress. Interest rather focused once more on Ukraines need for further western support, with negotiations being conducted both within the EU commission and with the Biden administration.

Continued difficulties for capital markets in China 

The Chinese economy and its capital markets continued to be plagued by lackluster growth, falling foreign direct investments and poor stock market performance. The troubles in the real estate sector were again highlighted, this time by the bankruptcy of developer Evergrande. However, the Chinese authorities introduced several measures in order to prop up confidence in the financial markets.

World index up

The start of 2024 thus showed a positive follow-through on the strong performance seen towards the end of last year, and the world index rose in January. The Magnificent Seven, with Nvidia and Microsoft at the forefront, continued to dominate, contributing to most of the overall increase in the broader indices. Otherwise, apart from information technology, most sectors posted positive returns with healthcare being up with the leaders, while raw materials and utilities declined. Looking at the regions, Japan and the US outperformed Europe while Hong Kong continued to suffer from investor exodus.



The healthcare sector had a tough 2023, partly as a result of the sector coping relatively well in 2022 when much else was struggling. The sector is once again doing slightly better than a general world index. It undeniably feels better, more hopeful and somewhat safer than for quite a while.

The key drivers behind the strong development in recent months have been several interacting factors: Firstly, a series of acquisitions in the fall and in the beginning of the year, secondly, an improved sentiment for biotech, supported by falling long-term interest rates and thirdly, a renewed interest in the sector after weak earnings in 2023. The year ahead has great potential to continue to perform well according both to our own forecasts and the market’s profit forecasts for the sector.

Keeping an extra eye on the US election

Good fundamentals with improved profit margins in a troubled world but, at the same time, with unknown factors impacting interest in the sector. For us, as sector investors, the American election will of course be of great interest. US elections always tend to affect our sector to some extent although probably less so this year. The economy, jobs, purchasing power, migration across the Mexican border and cultural issues in a broad sense will be subject of more attention. The pharmaceutical reform “IRA” will be implemented over the coming years and therefore will probably be less in focus, even though pharmaceutical prices as such are still high on many voters’ list of important social problems. The financing of healthcare for the elderly (Medicare) and the poor (Medicaid) are central issues in a country with large budget deficits, but they will hardly become hot election issues this year. They are simply too complicated and do not motivate marginal voters to switch sides. Instead, politicians tend to promise more instead of less.

Prospects for a strong 2024

So, there are prospects for 2024 to be a strong year for the healthcare sector despite the high level of geopolitical uncertainty and numerous elections around the world. If 2024 turns out to be a good stock market year for healthcare, we may see the strongest developments at the end of the year. This is usually the case during American election years. However, at this point in time, we are a little more optimistic than that. The fundamentals are good, interest rates have peaked for now and the sector lagged in 2023, so – time for a recovery, we believe. Both the strong development in January and the fact that we have an all-time high for the S&P 500 statistically point to a high probability of a continued rise in the stock market, which should give the healthcare sector the conditions in which to do well.