Outlook for the Stock Market
2023-12-15
■ US stock market: Pay attention to changes in market views on interest rate cuts
■ European stock markets: Are wary of the sustainability of price increases caused by a sense of security correction
The Dow Jones Average and the S&P 500 Index both saw a slight increase, lasting for six weeks. At a time when major stock indices were at their high levels since the beginning of the year, there seemed to be an increase in selling pressure led by position adjustments in the market last week due to the upcoming release of US employment-related data. In the November US employment statistics released over the weekend, it was shown that the labor market was solid. However, the initial results of a consumer survey by the University of Michigan in December showed a sharp decline in consumer expectations for inflation rates, and the stock market rose over the weekend.
The November US Consumer Price Index will be released on December 12th, while the results of the Federal Reserve Open Market Committee (FOMC) will be released on December 13th. If the expected start time of interest rate cuts in the market is delayed or the expected speed of interest rate cuts slows down, the upward trend of the stock market since late October may change, and caution needs to be maintained.
The European Stoxx 600 index has risen for four consecutive weeks. The Executive Director of the European Central Bank (ECB), Schnabel, stated that the possibility of further interest rate hikes has decreased. In addition, with the release of Eurozone economic indicators, concerns about economic deterioration have increased, and the ECB's expectation of interest rate cuts has pushed up stock prices. The German DAX index reached a historic high.
Against the backdrop of rising expectations for ECB interest rate cuts, the projected price-to-earnings ratio (PER) of the European Stoxx 600 index for the next year has risen to 12.2 times, but the stock price remains relatively cheap. On the other hand, the earnings per share (EPS) forecast peaked in late October and began to decline, while the performance prospects of major Eurozone companies are still deteriorating. It is necessary to carefully evaluate whether the stock price increase caused by the correction of the sense of security is sustainable.
■ European stock markets: Are wary of the sustainability of price increases caused by a sense of security correction
The Dow Jones Average and the S&P 500 Index both saw a slight increase, lasting for six weeks. At a time when major stock indices were at their high levels since the beginning of the year, there seemed to be an increase in selling pressure led by position adjustments in the market last week due to the upcoming release of US employment-related data. In the November US employment statistics released over the weekend, it was shown that the labor market was solid. However, the initial results of a consumer survey by the University of Michigan in December showed a sharp decline in consumer expectations for inflation rates, and the stock market rose over the weekend.
The November US Consumer Price Index will be released on December 12th, while the results of the Federal Reserve Open Market Committee (FOMC) will be released on December 13th. If the expected start time of interest rate cuts in the market is delayed or the expected speed of interest rate cuts slows down, the upward trend of the stock market since late October may change, and caution needs to be maintained.
The European Stoxx 600 index has risen for four consecutive weeks. The Executive Director of the European Central Bank (ECB), Schnabel, stated that the possibility of further interest rate hikes has decreased. In addition, with the release of Eurozone economic indicators, concerns about economic deterioration have increased, and the ECB's expectation of interest rate cuts has pushed up stock prices. The German DAX index reached a historic high.
Against the backdrop of rising expectations for ECB interest rate cuts, the projected price-to-earnings ratio (PER) of the European Stoxx 600 index for the next year has risen to 12.2 times, but the stock price remains relatively cheap. On the other hand, the earnings per share (EPS) forecast peaked in late October and began to decline, while the performance prospects of major Eurozone companies are still deteriorating. It is necessary to carefully evaluate whether the stock price increase caused by the correction of the sense of security is sustainable.