European shares seen holding near current levels through 2022

Author of the article: LONDON — Central bank policy tightening, fears of a recession and the economic impact of the war in Ukraine are all expected to keep a lid on any significant advance in European stocks for the remainder of 2022, a Reuters poll found. The poll of 21 fund managers, strategists and analysts,…
European shares seen holding near current levels through 2022

Author of the article:

LONDON — Central bank policy tightening, fears of a recession and the economic impact of the war in Ukraine are all expected to keep a lid on any significant advance in European stocks for the remainder of 2022, a Reuters poll found.

The poll of 21 fund managers, strategists and analysts, surveyed over the past two weeks, forecast the pan-European STOXX 600 index would reach 450 points by the end of the year, a 3.1% gain from Monday’s close.

European shares have sunk over 10% so far this year, suffering their worst start to a year since the COVID outbreak in 2020 and their second-worst start since 2008.

The decline in European stocks comes despite an upbeat first-quarter reporting season that is expected to show a 41.5% jump in earnings, according to Refinitiv I/B/E/S data. Excluding the energy sector, earnings are expected to have risen 22.4%.

But the outlook remains uncertain, with regional equities facing a number of headwinds moving towards the second half that cloud the prospects for earnings growth.

The ongoing war in Ukraine, persistent inflation and increased recession risk are all factors adding to the uncertain backdrop, according to Stephane Ekolo, global equity strategist at Tradition.

“We are still wary on equities given the very difficult geopolitical and macro backdrop coupled with a risk of margins pressures,” said Ekolo, who forecast the STOXX 600 index would drop approximately 55 points to 380 by the end of the year.

One of the main risks cited by poll respondents was the speed at which central banks, including the European Central Bank (ECB), are expected to tighten policy throughout the year to rein inflation in.

European Central Bank President Christine Lagarde said on Tuesday she saw the ECB’s deposit rate at zero or “slightly above” by the end of September, implying an increase of at least 50 basis points from its current level.

Money markets are pricing in over 100 basis points of ECB interest rate hikes by the end of the year.

“The ECB moving aggressively on monetary policy, especially when a growth slowdown is expected will weigh negatively on the region,” said Philipp Lisibach, chief global strategist at Credit Suisse.

Lisibach also highlighted prolonged higher energy prices, a spillover or escalation of the Ukraine conflict and a stronger euro as key risks to the outlook for euro zone equities.

The ECB last raised interest rates in 2011 and its deposit rate has been in negative territory since 2014.

Among country benchmarks, Germany’s DAX was seen ending the year at 14,000 points, down marginally from Monday’s closing price, according to the poll.

Britain’s FTSE 100 was seen at 7,494 at the end of the year, little changed from Monday’s close, while France’s CAC 40 was seen edging higher to 6,400.

(Other stories from the Reuters global stock markets poll package:)

(Reporting by Samuel Indyk; Additional polling by Milounee Purohit, Vijayalakshmi Srinivasan, Julien Ponthus and Danilo Masoni; Editing by Bernadette Baum)

Financial Post Top Stories

Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

Read More

Total
0
Shares
Leave a Reply

Your email address will not be published.

Related Posts
CME hog futures firm on summer demand, tight supplies
Read More

CME hog futures firm on summer demand, tight supplies

Author of the article: Reuters Christopher Walljasper CHICAGO — Chicago Mercantile Exchange Group Lean Hog Futures firmed on Wednesday, supported by strong demand that has pushed cash prices higher. “We’re still looking at tighter supplies in front of us,” said Rich Nelson, chief strategist at Allendale Inc. Pork demand firms during the summer, with U.S.…
Firms that are family unfriendly risk losing talent
Read More

Firms that are family unfriendly risk losing talent

Men, especially, are demanding more parental leave and flexibility to do child-care drop-offs and pickups Author of the article: Financial Times Emma Jacobs The pandemic has encouraged many professionals to reconsider their working patterns and fathers especially more interested in flexible work schedules so they can spend more time with their children. Photo by Getty…
Earnings optimism helps Wall Street shrug off rising yields
Read More

Earnings optimism helps Wall Street shrug off rising yields

Author of the article: U.S. stocks rose on Tuesday even in the face of surging Treasury yields as a positive earnings reports helped investors shrug off potential risks from an aggressive rise in U.S. interest rates and the Ukraine war. Johnson & Johnson rose 2.8% to a record high as the drugmaker’s quarterly profit exceeded…
Police arrest Macau’s No 2 junket boss in crackdown – media
Read More

Police arrest Macau’s No 2 junket boss in crackdown – media

Author of the article: HONG KONG — Police in Macau, the world’s biggest gambling hub, said on Sunday they had arrested two men for alleged illegal gambling and money laundering, as authorities step up a crackdown on illicit capital outflows from the Chinese mainland. “One of the men involved was responsible for operating an illegal…