Reuters Survey: Analysts Predict Japan and Brazil Stock Markets to Lead Global Market, Global Stock Market to Experience Year-End Correction

According to the information obtained from the Zhongtong Finance APP, most analysts surveyed by Reuters believe that global stock markets will experience a correction in the coming months. However, from now until the end of 2023, global stock markets are expected to rise slightly overall.

Global central banks have been combating inflation by raising interest rates, and the rate hikes are now nearing completion. The poor performance of the stock market in 2022 has continued into this year. However, despite the unexpected surge in stock markets from May to July and news that most major economies have performed better than expected, analysts' concerns about the stock market's poor performance have not completely disappeared. The attractive interest rates in the money market, which are much higher than the inflation rate, have also weakened the appeal of stocks. In a long period of zero interest rates and low inflation, stocks have been repeatedly described as the only choice for investors.

The benchmark US Treasury yield has jumped to the level of 2007 before the global financial crisis, indicating that investors are starting to believe that even if the Federal Reserve's rate hike cycle is nearing completion, interest rates will remain high for a longer period of time. Federal Reserve Chairman Jerome Powell is expected to deliver a speech at the central bank governors' meeting in Jackson Hole on Friday, which could further deepen these expectations.

In a survey conducted from August 9th to 23rd, 55 out of 77 analysts answered a question, with 71% of analysts stating that a correction in their respective regions' stock markets before the end of the year is likely or very likely. The remaining 22 people said it is unlikely or very unlikely.

Marko Kolanovic, Chief Global Market Strategist at JPMorgan, pointed out, "From now until the end of the year, we don't see any upside potential, but we believe that during this period, the stock market is likely to be significantly below our year-end expectations."

Although market expectations for the performance of the US economy have improved significantly, erasing the once widely circulated expectation of a rate cut by the Federal Reserve early next year, market volatility remains low.

Kolanovic said, "The prediction of an economic recession has been eliminated, and the new baseline is a soft landing or no landing. There is no longer fear, only complacency." The "fear of missing out" has largely driven the rebound in the stock market in recent years.

The Nikkei Index and the Brazilian Stock Index will outperform the market

The survey shows that most stock indices, including the S&P 500 Index, are expected to record a slight increase from the current levels before the end of the year.

The S&P 500 Index has risen nearly 15% so far this year, but its decline this month has exceeded 4%. It is expected to close at around 4496 points by the end of the year, about 2.2% higher than Monday's closing of 4399.77 points. The year-end estimate from the February survey was 4200 points. Terry Sandven, Chief Equity Strategist at Bank of America Wealth Management, said that the index is "likely in a corrective mode at the moment."

Among the 15 indices surveyed, only 4 are expected to rise by more than 5% by the end of the year.

The Nikkei 225 Index is expected to rise by nearly 8% from the current level, outperforming other major indices. Among emerging economies, the Brazilian BOVESPA Stock Index and the Mexican S&P/BMV IPC Index are expected to rise by around 13% and 7%, respectively. In the entire global economic cycle, the Bank of Japan has been implementing an extremely loose monetary policy, leading to a significant depreciation of the yen. The Central Bank of Brazil has just started cutting interest rates.

Almost all other indices are expected to either decline or only experience slight increases by the end of the year. The European STOXX 600 Index and the blue-chip European STOXX 50 Index are expected to rise by 1.3% and 0.6% respectively. The Indian stock market has risen by over 7% so far this year and is expected to only rise by an additional 1.2%.