The global economy needs to find a more solid footing before most stock markets to break out of their torpor, according to market strategists polled by Reuters who have broadly cut their 2023 forecasts compared with three months ago.
Analysts cut their 12-month predictions compared with three months ago for most of the 17 global indexes covered in Reuters polls conducted between Nov. 14-29.Asked how long the current downturn would last, a strong 70% majority - 66 of 90 - said it would be at least another three months. Nine said it would end within that short timeframe, while the remaining 15 said it already had.
“Sectors and regions with stable earnings, low leverage and pricing power should fare better in this environment. In the second half of 2023, we expect that the discussion will turn to peak hawkishness, with earnings resilience in a slowing growth environment in focus.” Perhaps the biggest unknown is just how successful central banks will be, particularly the U.S. Federal Reserve, in engineering a sharp decline in consumer price inflation from multi-decade highs without triggering a punishing recession.
Seven said company earnings, while six said simply the fear of missing out would be enough. Among the remaining nine, who gave myriad reasons, the most common was the Fed halting its interest rate rises. Wall Street’s benchmark S&P 500 index was predicted to end next year at 4,200, only about 6% higher than current levels.