World stocks' dance to continue, but inflation could mute the music: Reuters poll

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The bull-run in global stocks fueled by cheap cash and reflation hopes will continue for at least another six months but a rise in bond yields as inflation expectations grow could throw a spanner in the works, Reuters polls found

FILE PHOTO: Dividers are seen inside a trading post on the trading floor as preparations are made for the return to trading at the New York Stock Exchange in New York, U.S., May 22, 2020. REUTERS/Brendan McDermid/File Photo

But even as a gauge of equities slipped this week on hints of rising inflation led by higher oil prices and the strongest copper price in nearly a decade, the Feb. 12-24 polls of nearly 300 equity strategists found the trend of stock market gains was set to continue this year. In response to an additional question, over two-thirds, or 79 of 111 analysts, said the run-up in global stocks would continue for at least another six months, including 58 who said over a year.

With over 65%, or 72 of 110 strategists who responded to a separate question, expecting corporate earnings to return to pre-COVID-19 levels within a year, stock markets from developed to emerging were forecast to rally through 2021. [EPOLL/JP][EPOLL/IN][EPOLL/RU][EPOLL/EU][EPOLL/BR][EPOLL/US][EPOLL/CA]

But concerns were growing for a significant market correction as surging U.S. Treasury yields on rising inflation prospects have triggered caution over pricey equity valuations. When asked about the likelihood of a significant correction -- commonly defined as a fall of 10% or more -- in stock markets in the next six months, 87 of 115 respondents said it was “likely”, including 27 who said “very likely”.

 

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