Etoro’s expert analyzes the financial market in 2022
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In just a few days, we will say goodbye to 2021. eToro analyst Bogdan Maioreanu commented that 2021 has been a good year for the market. And we will enter an uncertain 2022. Below is a market analysis based on Mr. Bogdan Maioreanu’s point of view.
What can the stock market expect in 2022?
US and European stock markets have hit new highs in 2021. This leaves investors wondering what will happen next?
Over the past 71 years, the S&P has only had five gains of more than 10% in the last two months of the year (in 1954, 1962, 1970, 1985, and 1998). And statistically, such times lead to the market rising with an average increase of about 18% the following year. Maybe next year, we’ll see the S&P 500 rise for the fourth year in a row with a rare double-digit yield.
2022 is likely to be the second time in 50 years the S&P 500 hits a target of 5,050. Beyond the statistics, we have an atypical environment characterized by high inflation, low bond yields, and low-interest rates. However, an investor’s portfolio needs to be diversified. There are many threats from the pandemic or the political situation in Europe and Asia. Global GDP is expected to grow 4.4% next year, nearly double the previous decade’s average. This supports a 10% increase in corporate income. International interest rates remain low, and it may cause stock prices to be higher than average.
In the US, the value of the S&P 500 index is 30% higher than the long-term average. Many investors are worried they are being overvalued. But the index is made up of record profits for companies but still meager interest rates. It looks like we’ll have another year of solid GDP growth and favorable market conditions for cyclical companies. Examples include companies affected by the pandemic and are reopening, low-cap companies, and the financial and energy sectors.
Portfolio diversification is essential.
Europe is an exciting place.
In 2022, Europe will be an exciting place. Mr. Bogdan Maioreanu said that he and his associates value European stocks lower than US stocks. eToro analyst said the European Central Bank is not interested in limiting asset purchases or raising interest rates. They also have a long-term budget and a post-pandemic funding program in Europe. The budget is estimated at more than 800 billion euros by 2027. In addition, there are plans for the fight against global warming. There are a lot of funds for clean energy. And all of these plans are for Europe, which is also interesting news for investors.
Inflation is a significant concern for investors in 2021. It is likely to remain a concern in 2022. Although next year we could see lower inflation rates as supply chains adjust. And economic growth stabilized at a low level after the boom recorded this year.
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