After a first half full of many technical inconsistencies, analysts are starting to wonder what makes sense to expect for the last half of 2023. A look at equity markets.
The first half of 2023 saw an atypical recovery of speculative asset classes on the financial markets, despite an alleged energy crisis in Europe, banking crises in the United States and a growing tension caused by an ongoing war. This has generated constant concerns regarding the possibility of a major recession hitting Western economies. Furthermore, there have been sudden and persistent increases in interest rates, while inflation has consistently remained above the target of 2% set by Western central banks.
At the end of 2022, most analysts surveyed in the consensus analysis predicted a bearish start for equity markets, with a positive appreciation in the prices of more conservative assets, such as companies operating in the consumer staples, luxury goods and healthcare sectors, to the detriment of the more speculative companies. However, reality painted a different financial picture, where large-cap tech companies benefited from an unexpected surge, likely due to the significant revaluation of the cybersecurity and computer security} ’artificial intelligence. This has had an impact not only on the S&P500 index, but has led, albeit with some delay, to an increase in the value of companies that apparently had little to do with artificial intelligence.
Surprisingly, the EU50 index in Europe also hit all-time highs despite an ongoing technical recession.
What to expect from stock exchanges in the second half of 2023?
In the second half of the year, analysts’ attention is once again focused on recession as a crucial issue. The question arises whether central banks will be able to handle inflation without triggering a recession. Despite this, the economy and businesses have demonstrated greater resilience than expected. This is presumably the reason why stocks are experiencing increases in value on the financial markets. However, during a recession, there is usually a contraction in company margins.
Judging by central bankers’ statements, it is reasonable to expect further increases in interest rates. According to data from Refinitiv Datastream, this impacted company earnings expectations, which fell. However, a survey by Absolute Strategy Research shows that most fund managers expect a recession in the coming months, even though this percentage is gradually decreasing.
MSCI World: a look at the global stock index
Unsurprisingly, since May 2023, the MSCI World index, which represents global markets, has also shown an bullish trend heading towards the highs reached in 2022. This indicates a general appreciation of the vast majority of the largest-cap assets globally. The MSCI World index comprises a broad range of large and mid-cap companies from developed countries. Therefore, a rise in the index generally reflects a positive performance of global equity markets.
Original article published on Money.it Italy 2023-07-05 17:55:26. Original title: Azioni: cosa aspettarsi dal secondo semestre del 2023?
