Interview
At the Half: Taking Stock of Market Performance and Themes to Watch Ahead
- Q2 performance is anticipated to face a significant challenge in matching Q1 levels despite a favorable period, while corporate earnings, guidance, and confidence are projected to remain "very strong" with a durable economy showing no "aggressive deceleration in growth."
- The second half of the year carries an 80% probability of positive returns with a median of approximately 9%, contingent on the S&P gaining more than 10% in the first half.
- Monetary policy is expected to stay "accommodative," with no rate hike forecast by the research department until the third quarter of 2023.
- Market dynamics are predicted to see a moderation in risk appetite already visible against a positive backdrop, followed by a "reflation acceleration" and subsequent "reflation moderation."
- The era of negative bond yields is expected to conclude, and European unicorns are projected to grow beyond the current 120 count, with private market growth flowing into public markets "over time."
- Corporate activity is forecast to remain "very, very buoyant" globally and in Europe during the second half, driven by abundant financing and industry transformations.
- SPAC issuance is anticipated to facilitate nearly one trillion dollars in M&A enterprise value over the next 24 months, with boardrooms and shareholders expected to remain "susceptible to M&As."
- ESG fund flows are expected to maintain "huge momentum" for "quite some time," though the absence of a common ESG scorecard is likely to sustain boardroom frustration among corporates.