European Equity Expected to Set New Record in 2022: Reuters Poll

The German Stock Index DAX Graph was taken on November 30, 2021 on the Frankfurt Stock Exchange in Frankfurt, Germany. REUTERS / Staff

December 1, 2021

By Julien Ponthus and Danielo Masoni

London / Milan (Reuters) – According to a Reuters survey of 23 fund managers, strategists and brokers, COVID-19 pandemic uncertainty was boosted by a recovery in corporate profits and European equities in 2022. Will not undermine the prospect of a record high.

Polls conducted over the past two weeks predict that Germany’s DAX and France’s CAC 40 Best Equity Index will reach unknown highs by mid-2022, rising about 8% and 6%, respectively, from Monday’s closing prices. bottom.

According to polls on November 15-30, the Pan-European STOXX 600 rose 7% to reach 500 points by July, 10 points above the November 17 lifetime peak hit.

Concerns over the effects of the new coronavirus mutant have triggered widespread sales of European stocks on Friday, down 3.7%, but still up about 17% since the beginning of the year.

The strong recovery of profits from the recession caused by the 2020 blockade is behind this year’s strong performance.

According to the latest Refinitiv I / B / E / S data, profits surged 58.8% in the third quarter earnings season after a 96.4% and 152.6% surge in the first two quarters.

Philip Suisse’s Chief Global Strategist, Philippe Richibach, said:

He expected a higher single-digit equity return in 2022 compared to a double-digit return in 2021.

However, the resurgence of the pandemic in Europe and the announcement of new social restrictions in Austria and elsewhere have demoralized.

head wind

Economic conditions in the euro area eased in November amid consumer concerns about the fourth wave of coronavirus. Meanwhile, Germany’s business morals deteriorated for the fifth straight month in November as supply bottlenecks hit manufacturing.

“Europe’s headwinds are rising sharply due to rising energy prices, rising infectious diseases and delayed deliveries. This creates short-term uncertainty, but the situation should ease next year.” Tomas Hildebrandt, Senior Portfolio Manager at Evli Bank in Helsinki, said.

Most analysts continue to have a positive outlook, but some analysts predict a tough year for equities.

Stephane Ekolo, a strategist at brokerage firm Tradition, estimates that the STOXX 600 will lose about 30 to 430 points by the end of 2022 as economic growth slows.

“Corporate profits are likely to deteriorate in the next six months as supply chain turmoil continues, boost declines resume, potential regulatory risks and real interest rates rise. I think, “says Ekolo.

Among the risks cited by poll respondents was the surge in inflation, which forced the European Central Bank to accelerate cuts in monetary stimulus.

Consumer prices in Germany rose 4.6% in October and then 6% year-on-year, increasing pressure to respond to the ECB.

However, rising interest rates could boost European banks, which have already risen 28% this year, as they usually thrive when interest rate expectations rise.

The French presidential election in April brings further uncertainty in 2022, and incumbent Emmanuel Macron could face a far-right challenger.

“The victory of the euro skeptical president will pose a risk of European integration,” said Credit Suisse’s Risibach.

Graphic STOXX Voting: https: //

(Report by Julien Pontus in London and Danielo Masoni in Milan, additional polling by Mumal Rathore, Milounee Purohit, Anant Chandak, edited by Edmund Blair)

European Equity Expected to Set New Record in 2022: Reuters Poll

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