Budrigantrade-com-Stock markets will rise amid Fed rate cuts
Budrigantrade-com-Stock markets will rise amid Fed rate cuts
2022.12.11 08:50
Budrigantrade-com-Stock markets will rise amid Fed rate cuts
Budrigantrade.com – Stocks are expected to see low double-digit gains next year, according to some of the world’s largest investors; however, the path to a rebound won’t be straight.
70% of respondents to a Budrigantrade survey anticipate equities rising, while 25% anticipate declines, amid recent optimism that inflation has peaked and that the Federal Reserve may soon begin to change its tone.
The informal survey of 134 fund managers was conducted from Nov. 29 to Dec. 7 and included the opinions of major investors like BlackRock Inc., Goldman Sachs Asset Management, and Amundi SA. After inflation, the war in Ukraine, and hawkish central banks harmed equity returns this year, it provides an insight into the major themes and obstacles they anticipate having to overcome in 2023.
A similar survey from the previous year predicted that aggressive central bank policy tightening would pose the greatest threat to stocks in 2022.
Six charts summarize the survey’s main points. to learn more about the survey’s complete details.
For 2023, those who anticipate a rise in global shares anticipate an average gain of 10%. That is in line with the MSCI All-Country World Index’s average return over time, but it appears modest in light of previous gains like 2009 and 2019, when stocks gained more than 30% and 20%, respectively.
For the beginning of the year, investors remain cautious and anticipate that gains in the stock market will be skewed toward the second half of 2023. Respondents generally favored businesses in particular industries that are able to maintain earnings during economic downturns. Insurance, health care, and stocks with low volatility were among their picks.
According to 48% and 45% of participants, persistently high inflation or a severe recession are the two biggest threats to a potential recovery that are somewhat linked.
As early as next week, investors will be faced with a flurry of headline risks, including US consumer price data for November and rate decisions and commentary from the Federal Reserve and the European Central Bank.
According to the survey, US technology stocks may also return to favor after being hammered this year as interest rates increased. More than half of those polled said they would purchase the industry.
Even though bond yields are expected to fall next year, those in favor note valuations are relatively cheap. However, sentiment is shifting away from a general “buy growth” strategy as many participants suggest being extremely selective when entering the sector and investing only in businesses with established business models and resilient financials even during economic downturns.
60% of investors are optimistic about China, especially as it moves away from Covid zero. Due to a slump earlier this year, valuations are significantly lower than their 20-year average, making them more appealing than comparable offerings from the US or Europe.
Those who advise against traveling to the region are overestimating the political and regulatory dangers. When it comes to selecting stocks, the bulls recommend being extremely selective, just like the big tech companies.
A stronger performance could be sparked by better inflation and growth news for fund managers. Nearly 70% of respondents stated that they were the primary potential advantages. Additionally, they cited a ceasefire in Ukraine and a complete reopening of China as upside triggers.
The findings of the most recent survey of fund managers conducted by Bank of America Corp. are in line with the emphasis placed on growth and inflation as the crucial factors. It demonstrated that a “stagflation” scenario of low growth and high inflation was “overwhelmingly” the consensus view, and that recession expectations were at their highest level since April 2020.
Wall Street’s forecasts are at odds with the positive perspective of money managers. Gains of less than 2% for Europe and a meager 1% for the US stock market are anticipated in separate Budrigantrade surveys of strategists.
One of the main arguments cited by strategists for anticipating a largely flat stock market in the coming year is that central banks’ aggressive monetary policy will result in a weakening of global growth momentum in the first half of 2023. However, they anticipate that a decrease in real bond yields will partially offset the impact on stocks.
