POLL Global stocks set for partial, lackluster and uneven recovery

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 10, 2022. REUTERS/Brendan McDermid

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BENGALURU, May 26 (Reuters) – Global stocks are expected to recover from current levels but remain well below record highs this year and next as a majority of more than 150 stock analysts polled by Reuters predicted a rebound both dull and uneven.

Unlike previous episodes where investors viewed corrections as opportunities to buy stocks at a bargain price, the current downtrend is likely to be more persistent, underscoring the deteriorating outlook for risky assets.

This change in view was largely due to equities no longer having the support of central bankers, who were turning off the liquidity taps and now focusing more on tackling decades-high inflation by raising interest rate, in many cases aggressively.

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While analysts predicted a lackluster year for equities in the previous poll, taken just days before Russia’s February 24 invasion of Ukraine, the war has wreaked havoc on equities, the US Standard Index & Poor’s 500 (.SPX) being almost in an official bear market. Last week.

Reuters polls from May 12-24 covering 17 major indices showed most major exchanges struggling to recoup their year-to-date losses by the end of 2022. Almost all were expected to end the year in below lifetime highs and stay below through mid-2023.

“Global equities are in the midst of a bear market that is not yet over. Macro and earnings data points continue to soften as global economies move into later cycle phases. Plus, our work shows that earnings revisions are slowing globally,” noted Michael Wilson, chief U.S. equity strategist and chief investment officer at Morgan Stanley.

More than three-quarters of analysts, 79 out of 104, who responded to a separate question said the current downturn would last at least another three months.

While 48 said three to six months, 21 said six to nine months, six said nine to 12 months and four said more than a year. The other 25 chose less than three months.

Underscoring this negative outlook, the end-2022 medians for 16 of the 17 indices surveyed have been revised down from February polls.

Only the outlook for Mexico’s CPI index (.MXX) has been revised upwards, and only slightly.

The wider range of forecasts for late 2022 compared to the February poll, despite being closer to three months out, shows a greater degree of uncertainty about what lies ahead.

Nearly 60% of analysts, 61 out of 104, who answered an additional question expected volatility, which is below its highs for the year, to increase in their local markets over the next three months . The other 43 said it would decrease.

“As growth slows and inflation remains sticky, markets will show more volatility,” said Sameer Samana, senior global markets strategist at Wells Fargo Investment Institute.

Value stocks were expected to outperform growth stocks for the rest of the year according to 82 respondents, while 23 said growth stocks would outperform.

While Wall Street strategists expected the S&P 500 to end 2022 above current beaten levels and gain more than 10%, it is unlikely to recoup all of its nearly 17% losses for the year.

Even the volatile Sao Paulo Bovespa stock index (.BVSP), up just over 5% this year, is set to rise less than expected as jitters ahead of national elections and double-digit interest rates encourage people to switch to deposit accounts.

European stocks, which have fallen more than 10% so far this year, suffering their worst start to the year since the COVID-19 outbreak in 2020 and their second worst start since 2008, are also not expected to mark significant gains.

Indian stock markets were set to mark their first annual decline in seven years in 2022, with rising interest rates and weakening growth prospects reducing the chances of a quick rebound from this year’s already steep fall.

(Other stories from the Reuters Global Stock Markets Poll Brief:)

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Reporting by Hari Kishan and Indradip Ghosh; Additional reporting and polls by correspondents in Bangalore, Buenos Aires, London, Mexico City, Milan, New York, San Francisco, Sao Paulo, Tokyo and Toronto; Editing by Ross Finley and Jonathan Oatis

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