"After $18 trillion rout, global stocks face more hurdles in 2023"

" \r\n\r\n After $18 trillion rout, global stocks face more hurdles in 2023 \r\n\r\nMore tech tantrums. China\u2019s Covid surge. And above all, no central banks riding to the rescue if things go wrong. Reeling from a record $18 trillion wipeout, global stocks must surmount all these hurdles and more if they are to escape a second straight year in the red.\r\n\r\nWith a drop of more than 20% in 2022, the MSCI All-Country World Index is on track for its worst performance since the 2008 crisis, as jumbo interest rate hikes by the Federal Reserve more than doubled 10-year Treasury yields \u2014 the rate underpinning global capital costs.\r\n\r\nBulls looking ahead at 2023 might take solace in the fact that two consecutive down years are rare for major equity markets \u2014 the S&P 500 index has fallen for two straight years on just four occasions since 1928. The scary thing though, is that when they do occur, drops in the second year tend to be deeper than in the first.\r\n\r\nHere are some factors that could determine how 2023 shapes up for global equity markets:\r\n\r\n Central Banks \r\n\r\nOptimists may point out that the rate-hiking peak is on the horizon, possibly in March, with money markets expecting the Fed to switch into rate-cutting mode by the end of 2023. A Bloomberg News survey found 71% of top global investors expect equities to rise in 2023.\r\n\r\nVincent Mortier, chief investment officer at Amundi, Europe\u2019s largest money manager, recommends defensive positioning for investors going into the New Year. He expects a bumpy ride in 2023 but reckons \u201ca Fed pivot in the first part of the year could trigger interesting entry points.\u201d\r\n\r\nBut after a year that blindsided the investment community\u2019s best and brightest, many are bracing for further reversals.\r\n\r\nOne risk is that inflation stays too high for policymakers\u2019 comfort and rate cuts don\u2019t materialize. A Bloomberg Economics model shows a 100% probability of recession starting by August, yet it looks unlikely central banks will rush in with policy easing when faced with cracks in the economy, a strategy they deployed repeatedly in the past decade.\r\n\r\n\u201cPolicymakers, at least in the U.S. and Europe, now appear resigned to weaker economic growth in 2023,\u201d Deutsche Bank Private Bank\u2019s global chief investment officer Christian Nolting told clients in a note. Recessions might be short but \u201cwill not be painless,\u201d he warned.\r\n\r\n Big Tech Troubles \r\n\r\nA big unknown is how tech mega-caps fare, following a 35% slump for the Nasdaq 100 in 2022. Companies such as Meta Platforms Inc. and Tesla Inc. have shed some two-thirds of their value, while losses at Amazon.com Inc. and Netflix Inc. neared or exceeded 50%.\r\n\r\nExpensively-valued tech stocks do suffer more when interest rates rise. But other trends that supported tech\u2019s advance in recent years may also go into reverse \u2014 economic recession risks hitting iPhone demand while a slump in online advertising could drag on Meta and Alphabet Inc.\r\n\r\nIn Bloomberg\u2019s annual survey, only about half the respondents said they would buy the sector \u2014 selectively.\r\n\r\n\u201cSome of the tech names will come back as they have done a great job convincing customers to use them, like Amazon, but others will probably never reach that peak as people have moved on,\u201d Kim Forrest, chief investment officer at Bokeh Capital Partners, told Bloomberg Television.\r\n\r\n Earnings Recession \r\n\r\nPreviously resilient corporate profits are widely expected to crumble in 2023, as pressure builds on margins and consumer demand weakens.\r\n\r\n\u201cThe final chapter to this bear market is all about the path of earnings estimates, which are far too high,\u201d according to Morgan Stanley\u2019s Mike Wilson, a Wall Street bear who predicts earnings of $180 per share in 2023 for the S&P 500, versus analysts\u2019 expectations of $231.\r\n\r\nThe upcoming earnings recession may rival 2008, and markets are yet to price it in, he said.\r\n\r\n Delicate China \r\n\r\nBeijing\u2019s early-December decision to dismantle stringent Covid curbs seemed like a turning point for MSCI\u2019s China Index, whose 24% drop was a major contributor to global equity market losses in 2022.\r\n\r\nBut a month-long rally in mainland and Hong Kong shares has petered out as a surge in Covid-19 infections threatens economic recovery. Many nations are now demanding Covid testing for travelers from China, a negative for global travel, leisure and luxury stocks.\r\n\r\n Options Boom \r\n\r\nTechnicals are increasingly driving day-to-day equity moves, with the S&P 500 witnessing below-average stock turnover in 2022, but explosive growth in very short-term options trading.\r\n\r\nProfessional traders and algorithmic-powered institutions have piled into such options, which were until recently dominated by small-time investors. That can make for bumpier markets, causing sudden volatility outbreaks such as the big intraday swing after October\u2019s hot US inflation print.\r\n\r\nFinally, with the S&P 500 failing to break out from its 2022 downtrend, short-term speculation remains skewed to the downside. But should the market turn, it will add fuel to the rebound.\r\n\r\n \r\n \r\n \r\n "

"After $18 trillion rout, global stocks face more hurdles in 2023"

Nigerian Crude Oil Hits $70/barrel Amid Global TensionsAMP

Government to Expand Water-Energy-Nexus Project Nationwide to Boost Food SecurityAMP

Fixtures and Results of the second-leg of First Preliminary Round of 2025/26 TotalEnergies CAF Champions LeagueAMP