the economists They estimate that the S&P 500 will end 2023 at 4,000 points, just 0.9% higher than Friday’s close, while the European benchmark index Stoxx Europe 600 will finish next year around 4% higher, at 450 points. Barclays Plc strategists led by Emmanuel Cau have the same goal for the European gauge, saying the road to get there will be “tricky.”
The comments come after a recent rally -Yobuoyed by weaker US inflation data and news of easing of covid restrictions in China— which saw several global indices enter bull market technical levels. The strong rally since mid-October followed a tumultuous year for global markets as central banks embarked on aggressive rate hikes to rein in runaway inflation, stoking worries about a recession.
For his part, Goldman strategists said the gains are not sustainable, because stocks typically don’t recover from lows until the rate of deterioration in economic and profit growth slows. “ANDThe short-term path for equity markets is likely to be volatile and bearish.”they said.
The projection echoes that of Morgan Stanley’s Michael Wilson, who reiterated today that US stocks will end 2023 almost unchanged from their current level, and they’ll have a bumpy road to get there, including a big first-quarter decline.
In the meantime, Goldman analysts expect Asian stocks to outperform next year and the MSCI Asia-Pacific ex-Japan Index to end the year up 11% by 550 points. His peers at Citigroup Inc. turned more bullish on Chinese stocks today, saying Beijing’s change on zero-covid policy and ownership should boost earnings.
With the bear market still in full swing, Oppenheimer and his team recommended focus on quality companies with strong balance sheets and stable margins, as well as those with deep value and energy and natural resources stocks, where valuation risks are limited.