Global stocks fatigued from bull run, but no correction expected
The pulse of the global stock market has noticeably shifted, indicating a slowdown in momentum after a period of buoyant activity. These insights stem from a recent analysis involving stock analysts. The consensus is clear: while the phenomenal gains of the past may ease, the immediate future does not portend a significant downturn.
As investors recalibrate their expectations for interest rate cuts by central banks in 2024, stock markets near their peak are poised for more modest growth. However, the underpinning of a sturdy global economy, coupled with the surge in technology stocks—a major force in equity indices, particularly in the U.S.—suggests a posture of resilience rather than retrenchment.
In a telling survey, a substantial portion of analysts—60% of 85 respondents—conveyed skepticism towards a major correction in the next quarter, categorizing it as unlikely to highly unlikely. This perspective underscores a prevailing caution precipitated by recent market rallies and recalibrated expectations for monetary policy adjustments.
“The recent surge in stock markets has injected a dose of caution among our portfolio managers regarding future outlooks. The anticipation of interest rate cuts, a critical stimulant for the market’s rally, now invites a reconsideration,” articulated Paul Quinsee of JP Morgan Asset Management. Yet, the groundwork of corporate profitability remains robust, with a promising horizon for profit growth post-COVID, dispelling gloomier forecasts.
The survey spanned 15 stock market indices, revealing a singular expectation for Britain’s FTSE to match its prior performance. The 2023 trajectory has been marked by gains exceeding 10% across nearly all indices.
“Equity return expectations for 2024 should be tempered. Replicating 2023’s double-digit returns appears challenging with stocks currently priced for perfection,” observed Daniel Morgan from Synovus Trust.
Forecasts place the S&P 500, a bellwether for global portfolio flows and a standout with an 11% gain this year, to maintain its current level through 2024. Meanwhile, Japan’s NIKKEI, enjoying a 15% uptick, is anticipated to secure an additional 5% gain, showcasing another year of superior performance.
European and British stocks, having capitalized on their economies’ evasion of recession, face predictions of stagnant growth or slight declines by year’s end. Indices like the Euro STOXX 50, France’s CAC 40, and Spain’s IBEX have seen respectable gains this year but are expected to achieve only minor progress from here.
In contrast, India’s benchmark BSE index, despite high valuations, is poised to outshine its counterparts with an anticipated 8% gain for the year’s remainder, adding to its current 2% increase.
While the current mood of global equity markets might be marked by nuances of caution and recalibration, the foundational aspects sustaining growth—robust economic indicators, technological innovation, and solid corporate earnings—herald a landscape where drastic downturns seem unlikely, even as the frenetic pace of previous gains cools.
