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That’s the same level as the expected 12-month forward earnings yield across the S&P 500, which has risen by more than 15 per cent since January. Although it has been one of the best half-years for the index in two decades, it has left investors nervous about the potential for future returns. “Now we have the inflation problem, which has led to monster rate hikes, it means equity markets are much less attractive,” says Christian Kopf, head of fixed income at Union Investment.
The price-to-earnings ratio on the S&P 500, a closely watched valuation metric, has risen to 23 times this year, reduced to 18 times when the index is measured on an equal-weighted basis compared with 13 times for the Stoxx Europe 600, according to Refinitiv.