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POLL-Global stocks to be higher and lackluster in the year ahead

Hari Kishan

Bangalore, 30 November (Reuters)Market strategists surveyed by Reuters say the global economy needs to find a firmer footing before most stock markets emerge from the slump.

But that may be a tall order given that major central banks still have months to pause one of the quickest and most aggressive rate hike campaigns on record.

Following a strong start to the year, stocks around the world have lost much of their gains following the rock bottom of the COVID-19 pandemic. With a few exceptions like India, most countries are struggling to sustain a sustained recovery.

Analysts cut their 12-month forecasts down from three months ago for most of the 17 global indexes covered in the Reuters poll conducted Nov. 14-29.

When asked how long the current recession will last, a majority of just over 70% (66 out of 90) said it would take at least three more months. Nine said they would finish within that short period, while the remaining 15 of his said they had already finished.

Much will depend on how long central banks can sustain the current mantra that interest rates will stay high for longer than investors expect, although they will probably rise slightly in the coming months.

“This theme will continue to dominate in the first half of 2023, with equities underperforming,” wrote Credit Suisse strategists in their 2023 investment outlook.

“Sectors and geographies with stable earnings, low leverage and pricing power should fare well in this environment. I expect the debate to reach a hawkish peak.”

Most of the 17 stock indices covered by the Reuters poll are projected to post single-digit gains by the end of 2023, not enough to erase 2022’s year-to-date losses.

The November quarterly survey was the fourth consecutive survey in which strategists trimmed estimates overall.

Perhaps the biggest unknown is how successful central banks, especially the US Federal Reserve, will be in sharply lowering consumer price inflation from multi-decade highs without triggering a punitive recession. That’s it.

Optimistic forecasts for stock market rally depend on a mild recession or none at all.

Indeed, when asked what are the main drivers of the stock market’s return to an uptrend, more than 70% of strategists (52 out of 74) said better economic fundamentals.

Seven said their company’s bottom line, and six said simply fear of missing an opportunity was enough. The most common of the rest of his nine who gave a myriad of reasons was that the Fed stopped raising rates.

However, as many major central banks are expected to continue raising interest rates next year, some economies are expected to slow sharply or enter recession soon.

“We maintain our view that equities will continue to move higher into December, but central bank policy remains restrictive,” Marco Kolanovic, chief global market strategist at JPMorgan, said in a note. Assuming that, we see an increasingly difficult background for growth in 2023.”

Wall Street Benchmark S&P 500 Index .SPX It is projected to finish at 4,200 next year, only about 6% higher than current levels.

STOXX Index of Top 50 Blue Chip Stocks in the Eurozone .STOXX50E It was expected to drop around 8% by mid-2023 and trade around there by the end of the year.

However, the survey predicted relatively strong performance for emerging market stock markets.

India’s benchmark BSE .BSESN The index has already risen nearly 7% over the year and was expected to rise another 9% by the end of 2023.

Brazil’s benchmark Bovespa stock index is up just 4% year-to-date .BVSP It was predicted to rise 13% by the end of 2023.Mexico S&P/BMV IPC Index .MXXfell by 3% in 2022, but was expected to recover by almost 7% by the end of next year.

Graphic of a Reuters poll on global stock market forecastshttp://tmsnrt.rs/2nHJiJ9

(Reporting by Hari Kishan and Indradip Ghosh; additional reporting and polls by correspondents in Bangalore, Buenos Aires, London, Mexico City, Milan, New York, San Francisco, São Paulo, Tokyo and Toronto; editing by Ross Finley and Alex Richardson)


The views and opinions expressed herein are those of the authors and do not necessarily reflect those of Nasdaq, Inc.

https://www.nasdaq.com/articles/poll-global-stocks-to-grind-higher-lacklustre-year-ahead POLL-Global stocks to be higher and lackluster in the year ahead

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