European stocks hit new record in 2022: Reuters poll

German Stock Price Index DAX chart pictured at the stock exchange in Frankfurt
A German stock price index DAX chart is illustrated at the stock exchange in Frankfurt, Germany, November 30, 2021. REUTERS / Staff

December 1, 2021

By Julien Ponthus and Danilo Masoni

LONDON/MILAN (Reuters) – Uncertainty over the COVID-19 pandemic has not dampened the outlook for European stocks hitting record highs in 2022, boosted by a rebound in corporate profits , according to a Reuters poll of 23 fund managers, strategists and brokers.

The poll, conducted over the past two weeks, predicts Germany’s DAX and France’s CAC 40 blue chip indexes will hit all-time highs in mid-2022, up around 8% and 6% respectively from levels. closed on Monday.

The pan-European STOXX 600 will increase by 7% and hit 500 in July, 10 points above the peak reached on November 17, according to the November 15-30 poll.

Although European stocks fell 3.7% on Friday as concerns about the impact of a novel coronavirus variant caused a widespread sell-off, they are still up about 17% since the start of the year.

The strong rebound in profits from the lockdown-induced recession in 2020 is behind this year’s strong performance.

According to the latest Refinitiv I/B/E/S data, the Q3 earnings season saw profits jump 58.8% after rising 96.4% and 152.6% in the first two quarters.

“We expect earnings to be the main driver for global equities and the same is true for the euro area,” said Credit Suisse global head of strategy Philipp Lisibach.

He expects a high single-digit return on equity in 2022 compared to a double-digit return in 2021.

However, the outbreak of the pandemic in Europe and the announcements of new social restrictions in Austria and elsewhere were dismay.


Euro zone economic sentiment eased in November amid consumer concerns about a fourth wave of the coronavirus, while German business sentiment faltered for a fifth straight month in November due to Supply bottlenecks affect the manufacturing sector.

“European headwinds are spiked as energy prices rise, infections increase and deliveries delay. This creates uncertainty in the short term, but the situation should ease next year,” said Tomas Hildebrandt, senior portfolio manager at Evli Bank in Helsinki.

Most analysts still have a positive outlook for the future, but some predict a year ahead for stocks.

Stephane Ekolo, a strategist at brokerage Tradition, sees the STOXX 600 losing about 30 points to 430 points by the end of 2022, due to slowing economic growth.

“I believe corporate earnings are likely to deteriorate over the next six months… due to continued supply chain disruptions, accelerated reopening fading, potential downside risks and exchange rates,” Ekolo said. real increase,” Ekolo said.

Among the risks cited by poll respondents is that a spike in inflation will force the European Central Bank to accelerate the reduction of monetary stimulus.

Consumer prices in Germany rose 6% year-on-year after rising 4.6% in October, increasing pressure on the ECB to react.

But the rate hike is likely to give a boost to European banks, which are already up 28% this year, as they typically thrive when interest rate expectations rise.

The French presidential election in April leads to further uncertainty in 2022, with incumbent Emmanuel Macron likely to face a far-right challenger.

Credit Suisse’s Lisibach noted: “A victory for a Euro-skeptic president would be a risk to European integration.

Graphic STOXX Poll:

(Reporting by Julien Ponthus in London and Danilo Masoni in Milan; Additional Polling by Mumal Rathore, Milounee Purohit and Anant Chandak; Editing by Edmund Blair) European stocks hit new record in 2022: Reuters poll

Bobby Allyn

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