The world’s major stock markets should trade higher a year from now but fears of a slowing economic recovery might permit only modest gains in some rich-world markets, a Reuters poll showed yesterday.
Against expectations of previous quarterly Reuters polls, most stock markets from both the rich world and emerging markets are on course to finish the first half of 2010 in the red. Median forecasts from over 300 strategists surveyed in the latest poll showed a much better second half to the year – though they were more likely to predict bigger gains over the next 12 months for fast-growing emerging indexes than major industrialised peers.
With a Eurozone government debt crisis that rocked global markets in the second quarter yet to be resolved, and austerity measures taking effect in many Group of 20 nations, respondents pointed to a global economic slowdown in the months ahead.
“Risks of a crisis within the Eurozone remain elevated,” said Philippe Gijsels of BNP Paribas Fortis Global Markets. “The world economy will slow in the second half -- the big question is by how much.”
Still, most stock exchanges are seen ending the year with strong gains compared with their closing levels at the end of 2009.
The US Dow Jones Industrial Average and the S&P 500 are both expected to end the year posting double-digit increases of 11.7 and 12.6 per cent respectively, despite both trading in the red for this year as of 23 June.
Strong corporate earnings in North America and Europe will form key pillars of support behind the ascendancy of their stock indexes in coming quarters, poll respondents said.
Renewed expectations for the major central banks to keep interest rates at a record low for the rest of this year also added to the positive sentiment for stocks to the end of 2010.
The relative weakness of the recovery in Britain and the Eurozone will likely limit gains in major stock exchanges there to mid-single-digit percentages by the end of 2010, the poll showed.
City A.M. Reporter