# Global stocks to grind higher, lacklustre year ahead: Reuters poll
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-11-30
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Global Economy Forecast 2023: Stock Market Torpor Continues
Meta Description: Market strategists cut 2023 forecasts, expect slow recovery due to ongoing interest rate hikes. Equities struggle post-COVID, analysts pessimistic.
URL: https://financedigest.com/global-stocks-to-grind-higher-lacklustre-year-ahead-reuters-pollhtml

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By Hari Kishan

BENGALURU (Reuters) – The global economy needs to find a more solid footing before most stock markets break out of their torpor, according to market strategists polled by Reuters who have broadly cut their 2023 forecasts compared with three months ago.

That may be a tall order, however, given major central banks still have months to go before pausing one of the swiftest and most aggressive campaigns of interest rate hikes on record.

Following a strong start to the year, [equities the world over lost much of their gains](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold") following the nadir of the COVID-19 pandemic. Barring a few exceptions such as India, most have struggled to stage a sustained recovery.

Analysts cut their 12-month predictions compared with three [months ago for most of the 17 global](https://www.financedigest.com/artificial-intelligence-goes-global-demand-for-ai-reaches-four-continents-in-three-months-new-figures-from-synechron-show.html "Artificial Intelligence goes global: demand for AI reaches four continents in three months, new figures from Synechron show") indexes covered in Reuters polls conducted between Nov. 14-29.

Asked how long the current downturn would last, a [strong 70% majority – 66 of 90 – said it would be at least](https://www.financedigest.com/strong-nighttime-earthquake-jolts-sleeping-mexicans-at-least-one-death-reported.html "Strong nighttime earthquake jolts sleeping Mexicans, at least one death reported") another three months. Nine said it would end within that short timeframe, while the remaining 15 said it already had.

Much will depend on how much longer central banks persist with their current mantra that interest rates, while perhaps rising in smaller increments in coming months, will stay higher for longer than [investors expect](https://www.financedigest.com/wave-of-lawsuits-over-ftx-expected-but-investors-will-face-legal-hurdles.html "‘Wave’ of lawsuits over FTX expected, but investors will face legal hurdles").

This theme will likely continue to dominate during the first half of 2023, leading to muted equity performance,” wrote strategists at [Credit Suisse](https://www.financedigest.com/mitsubishi-ufj-to-postpone-at1-bond-issuance-in-credit-suisse-fallout.html "Mitsubishi UFJ to postpone AT1 bond issuance in Credit Suisse fallout") in their 2023 investment outlook.

Sectors and regions with stable earnings, low leverage and [pricing power](https://www.financedigest.com/belgium-supports-energy-price-caps-suspending-trading-in-eu-power-crunch.html "Belgium supports energy price caps, suspending trading in EU power crunch") should fare better in this environment. In the second half of 2023, we [expect that the discussion will turn to peak hawkishness](https://www.financedigest.com/hawkish-ecb-comments-push-up-rate-hike-expectations.html "Hawkish ECB comments push up rate-hike expectations"), with earnings resilience in a slowing growth environment in focus.

Most of the 17 [stock indexes covered in the Reuters polls were predicted single-digit gains](https://www.financedigest.com/stocks-mixed-dollar-gains-after-robust-inflation-jobs-data.html "Stocks mixed, dollar gains after robust inflation, jobs data") by end-2023, which would not be enough to erase 2022 year-to-date losses.

The November quarterly survey was the fourth in a row in which strategists as a whole [scaled back](https://www.financedigest.com/mifid-ii-why-you-should-not-scale-back-your-implementation-efforts.html "MIFID II: WHY YOU SHOULD NOT SCALE BACK YOUR IMPLEMENTATION EFFORTS") their estimates.

Perhaps the biggest unknown is just how successful [central banks](https://www.financedigest.com/stock-pickers-reckon-its-time-to-move-on-from-central-banks.html "Stock pickers reckon it’s time to move on from central banks") will be, particularly the U.S. Federal Reserve, in engineering a sharp decline in consumer [price inflation](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc-2.html "UK shop price inflation hits record 8% in January: BRC") from multi-decade highs without triggering a punishing recession.

The still mostly optimistic forecasts for [stock markets to grind higher](https://www.financedigest.com/wall-street-stocks-power-higher-as-treasury-yields-and-dollar-ease.html "Wall Street stocks power higher as Treasury yields and dollar ease") depend on mild recessions or none at all.

Indeed, asked what would be the main driver for [stock markets to snap back to a rising](https://www.financedigest.com/stocks-rise-after-bank-sale-fuels-investor-risk-appetite.html "Stocks rise after bank sale fuels investor risk appetite") trend, a more than 70% majority of strategists, 52 of 74, said better economic fundamentals.

Seven said company earnings, while six said simply the [fear of missing](https://www.financedigest.com/alphabets-miss-fans-inflation-fears-across-digital-advertising.html "Alphabet’s miss fans inflation fears across digital advertising") out would be enough. Among the remaining nine, who gave myriad reasons, the most common was the [Fed halting its interest rate](https://www.financedigest.com/fed-rates-up-boe-up-ecb-up-stocks-up.html "Fed rates up, BoE up, ECB up, stocks up") rises.

But with many major central banks expected to continue hiking rates into [next year](https://www.financedigest.com/1-in-10-workers-considering-a-career-change-in-the-next-year.html "1 in 10 workers considering a career change in the next year"), several economies were forecast to slow sharply or enter a recession soon.

We remain of the view that equities continue to squeeze [higher into December but do see an increasingly challenging growth backdrop](https://www.financedigest.com/dollar-advances-as-strong-u-s-data-backs-higher-rates-backdrop.html "Dollar advances as strong U.S. data backs higher rates backdrop") in 2023, assuming central bank policies remain restrictive,” wrote Marko Kolanovic, chief global markets strategist at J.P. Morgan in a note.

[Wall Street’s benchmark S&P 500 index](https://www.financedigest.com/wall-st-indexes-mixed-treasury-yields-tick-up-as-higher-rates-loom.html "Wall St indexes mixed, Treasury yields tick up as higher rates loom") was predicted to end next year at 4,200, only about 6% higher than current levels.

The STOXX index of the euro zone’s top 50 blue chip [stocks was seen falling](https://www.financedigest.com/stocks-yields-fall-data-suggests-u-s-economy-cooling.html "Stocks, yields fall; data suggests U.S. economy cooling") about 8% by mid-2023 and to be trading around there by the end of the year as well.

But the survey predicted relatively better performance for emerging market [stock](https://www.financedigest.com/compelling-tips-to-make-profitable-investments-in-the-stock-market.html "Compelling Tips to Make Profitable Investments in the Stock Market") markets.

[Supported in part](https://www.financedigest.com/51-of-brits-support-teresa-may-and-would-grant-access-to-their-personal-communication-and-internet-browsing-history-as-part-of-the-snoopers-charter.html "51%* of Brits support Teresa May and would grant access to their personal communication and internet browsing history as part of the Snooper’s Charter ") by increasing domestic inflows to equity funds from a younger population keen to take risks, India’s benchmark BSE index, already up nearly 7% for the year, was expected to gain another 9% by end-2023.

Up only 4% year to date, Brazil’s benchmark Bovespa [stock index was predicted to rally](https://www.financedigest.com/asian-stocks-rally-as-bank-jitters-calm-alibaba-lifts-mood.html "Asian stocks rally as bank jitters calm, Alibaba lifts mood") 13% by end-2023. Mexico’s S&P/BMV IPC index, down 3% in 2022, was [expected to recover almost 7% by the close of next year](https://www.financedigest.com/philips-expects-to-reach-recall-settlements-this-year.html "Philips expects to reach recall settlements this year").

(Other stories from the [Reuters Q4 global stock markets poll](https://www.financedigest.com/germany-home-prices-to-sink-nearly-6-this-year-reuters-poll.html "Germany home prices to sink nearly 6% this year – Reuters Poll") package:)

(This story has been refiled to remove extraneous word “to” from first paragraph)

(Reporting by Hari Kishan and Indradip Ghosh; Additional reporting and polling by correspondents in Bengaluru, Buenos Aires, London, Mexico City, Milan, New York, [San Francisco](https://www.financedigest.com/paul-jasper-joins-rimon-laws-san-francisco-office-as-partner.html "Paul Jasper joins Rimon Law’s San Francisco Office as Partner"), Sao Paulo, Tokyo and Toronto; Editing by Ross Finley and Alex Richardson)


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