Friday, December 17, 2010

Growing Optimism for Global Equity Markets

Expectations that the global economic expansion will continue through 2011 is prompting Wall Street investment strategists to predict robust stock market gains next year.

The rosiest forecasts are for the markets of the leading emerging economies (China, India, Brazil et.al.), where economic growth is expected to be strongest. A mid December Bloomberg survey of stock strategists at UBS, Citigroup, JPMorgan Chase, Credit Suisse, and Morgan Stanley foresee, on average, a 30% jump in the emerging markets as a group. These same gurus also predict a 14% advance for the Stoxx Europe 600 Index even though the continent will likely continue to suffer from a sovereign debt crisis and government austerity programs that will further retard already sluggish economic growth.

Most notable is the rising optimism for the U.S. stock market as represented by the Standard & Poor’s 500 Index. The general view is that Congressional and Federal Reserve initiatives to accelerate economic growth will boost corporate profits and result in a 3rd consecutive positive year for this benchmark. A survey of 11 strategists by Bloomberg in December shows an average rise of 11% in 2011 for the S&P 500. Among the most optimistic are Deutsche Bank and Goldman Sachs with anticipated jumps of 25% and 20% respectively, whereas Barclays and BofA Merrill Lynch forecast advances of 15% and 14% respectively.

We wish our readers a happy and healthy holiday season and a profitable New Year.

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