LONDON – Equity markets’ correction of 5 per cent-10 per cent by the end of the year was the majority prediction in the September market sentiment survey published by Deutsche Bank on Monday, in the latest sign of a market warning that the equity bull run will end.
According to the report, conducted from September 7-9 and covering over 550 market professionals globally, 58 per cent of the respondents said they expected to sell equities by the end of the year.
Backed by massive stimulus from central banks, stocks have risen from levels in March 2020, when the COVID-19 pandemic rocked the markets and led to a sharp fall in equities. The MSCI World Equity Index has nearly doubled since then.
Economic growth and corporate profits have improved faster than expected, but now data from the United States and China suggest the recovery may be running out of steam.
COVID-19 was still considered the biggest risk to market stability, with 53 percent of Deutsche Bank survey participants citing concerns over new virus variants bypassing vaccines. This was followed by higher than expected inflation.
Nearly a third of respondents (32 percent) cited strong economic growth as not embodying or being short-lived and central bank policy error as risks to market stability.
The September survey also showed that confidence in temporary inflation – as flagged by central banks – is waning, although this still remains a consensus.
Banks including BofA, Morgan Stanley, Citi and Credit Suisse last week asked clients to reduce their exposure to equities.
BNP Paribas said in a client note last week that it expects the S&P 500 to be at its current level at the end of the year.
“Given the risk of higher taxes and interest rates, we remain broadly neutral on US equities and see more upside in European stocks,” BNP Paribas said.
Deutsche Bank also informed market professionals about their intentions to return to work after the pandemic, and found that almost one in five people still had not returned to their office since March 2020, when the pandemic struck a global level. The lockdown had started.
Deutsche Bank said the number was even lower at one in three in the United States.
This News Originally From – The Epoch Times