BENGALURU- Global stocks are forecast to recover from current levels but stay well below record highs this year and next as a majority of more than 150 equity analysts polled by Reuters predicted a rebound that is both lackluster and uneven.
Unlike previous episodes where investors saw corrections as opportunities to pick up stocks at a bargain, the current downtrend was expected to be more persistent, underscoring the deteriorating outlook for risk assets.
That shift in view was largely down to stocks no longer having a backstop from central bankers, who are turning off the liquidity taps and are now more focused on fighting decades-high inflation by hiking interest rates, in many cases aggressively.
While analysts were predicting a dull year for equities in the previous poll, taken only days before Russia’s Feb. 24 invasion of Ukraine, the war threw stocks into disarray, with the US Standard & Poor’s 500 nearly in an official bear market last week.
The May 12-24 Reuters polls covering 17 major indices showed most major bourses struggling to recoup year-to-date losses by end-2022. Almost all were expected to end the year below lifetime highs, and remain below them by mid-2023.
“Global equities are in the midst of a bear market that is not yet finished. Macro and earnings data points continue to soften as global economies move toward later-cycle phases. Furthermore, our work shows that earnings revisions are slowing globally,” noted Michael Wilson, chief US equity strategist and chief investment officer at Morgan Stanley.
Over three-quarters of analysts, 79 of 104, who answered a separate question said the current downturn would last at least another three months.
While 48 said three to six months, 21 said six to nine months, six said nine to 12 months, and four said over a year. The remaining 25 chose less than three months. – Reuters
