Professional traders working on the floor of the New York Stock Exchange (NYSE) in New York City, USA, October 17, 2022.Reuters/Brendan McDiarmid/File Photo Acquisition of license rights
BENGALURU, Aug 23 (Reuters) – Global stock markets are headed for a correction in the coming months, although a majority of analysts say they will generally see modest gains between now and the end of 2023, according to a Reuters poll. is expected to be recorded.
A bad year for stocks in 2022 has continued this year as central banks around the world battle higher interest rates and near-term inflation.
But the unexpected rise in stock prices from May to July coincided with news that earnings in most major countries were better than expected, but analysts said stocks might underperform. The persistent concerns among the list have not completely disappeared.
Attractive interest rates in money markets, well above inflation, also make stocks less attractive. In the long era of zero interest rates and low inflation, it has been repeatedly said that stocks are the only game for investors.
The rise in benchmark US Treasury yields to pre-global financial crisis levels in 2007 suggests that interest rates will continue to rise for a longer period of time, even though the Federal Reserve’s rate hike cycle campaign is coming to an end. It shows investors are starting to think it will stay high.
Fed Chairman Jerome Powell is scheduled to speak at the Central Bankers’ Conference in Jackson Hole on Friday, which could further permeate those expectations.
71% (55 out of 77) of analysts who responded to additional questions in the August 9-23 survey said a correction in the domestic stock market is likely or very likely by the end of the year. . The remaining 22 said it was unlikely or very unlikely.
“We don’t see any upside from here into the end of the year…but I think it’s quite possible that the stock market will be significantly below year-end expectations for the foreseeable future,” said Marco Kolanovic, chief global market strategist at JP. said. Morgan.
But market volatility is low, even as expectations about what will happen to the world’s largest economy have soared, dispelling once-widespread expectations that the Fed will cut rates early next year.
“Recession predictions have been erased and the new base case is a soft/no landing. No more fear, just gratification,” Kolanovic said. Much of the stock market rally in recent years is said to have been driven by the “fear of missing an opportunity.”
Nikkei to outperform Bovespa
Most indices, including Wall Street’s benchmark S&P 500 (.SPX), are expected to register a slight gain from current levels by the end of the year, according to polls.
The S&P 500 index, which has already gained nearly 15% this year, was expected to drop more than 4% this month and end the year at 4,496, about 2.2% above Monday’s closing of 4,399.77. A Reuters poll in February had expected 4,200 by the end of the year.
The index “may be in correction mode right now,” said Terry Sandven, chief equity strategist at US Bank Wealth Management.
Of the 15 stock indices surveyed, only four were expected to rise more than 5% by the end of the year.
Japan’s Nikkei Stock Average (.N225) is expected to rise nearly 8% over the coming months, outperforming its major peers. Among emerging markets, Brazil’s Bovespa (.BVSP) and Mexico’s S&P/BMV IPC (.MXX) are expected to rise about 13% and 7%, respectively.
Japan’s central bank has implemented ultra-loose monetary policy throughout the global economic cycle, resulting in a sharp depreciation of the yen and Brazil’s central bank just starting to cut rates.
Nearly all other indices were expected to fall or rise only marginally by the end of the year.
The European STOXX600 index (.STOXX) and the blue chip euro STOXX50 index (.STOXX50E) were expected to rise 1.3% and 0.6%, respectively.
Indian stocks (.BSESN) have risen more than 7% since the beginning of the year, but were expected to gain just 1.2% more.
(More articles in Reuters’ third-quarter global stock market research package:)
Reported by Hari Kishan and Indradip Ghosh. Additional coverage and polls by correspondents in Bangalore, Buenos Aires, London, Mexico City, Milan, New York, San Francisco, São Paulo, Tokyo and Toronto.Editing: Ross Finley and John Stonestreet
Our criteria: Thomson Reuters Trust Principles.