Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Stocks correction of 5%-10% likely by year end - Deutsche survey

Published 13/09/2021, 08:32
Updated 13/09/2021, 10:10
© Reuters. FILE PHOTO: A man points a computer screen showing stock information in this illustration photo taken in Bordeaux, France, March 30, 2016. REUTERS/Regis Duvignau/File Photo

© Reuters. FILE PHOTO: A man points a computer screen showing stock information in this illustration photo taken in Bordeaux, France, March 30, 2016. REUTERS/Regis Duvignau/File Photo

LONDON (Reuters) -An equity market correction of 5%-10% by the end of the year was the majority prediction in a September market sentiment survey published by Deutsche Bank (DE:DBKGn) on Monday, in the latest sign of market caution that the equity bull run will end.

According to the report, conducted from Sept. 7-9 and covering over 550 market professionals globally, 58% of respondents said they expected an equity sell-off by the end of the year.

Helped by vast amounts of stimulus from central banks, stocks have surged from the lows they reached in March 2020 when the COVID-19 pandemic spooked markets and triggered a sharp drop in equities. The MSCI world equity index has nearly doubled since then.

Economic growth and corporate profits have recovered faster than expected, but now data from the United States and China suggests that recovery may be running out of steam.

COVID-19 was still considered the biggest risk to market stability, with 53% of Deutsche Bank survey participants citing concerns over new virus variants that bypass vaccines. This was followed by higher-than-expected inflation.

Around a third of respondents (32%) cited strong economic growth not materialising or being short-lived, and a central bank policy error, as risks to market stability.

The September survey also showed that belief in transitory inflation - as flagged by central banks - is edging down though it still remains the consensus.

Banks including BofA, Morgan Stanley (NYSE:MS), Citi and Credit Suisse (SIX:CSGN) last week told clients to trim exposure to stocks.

BNP Paribas (PA:BNPP) said in a client note last week that it expects the S&P 500 to be at its current level at the end of the year.

"Given the risk of higher taxes and interest rates, we are broadly neutral on US equities and see more upside in European stocks," BNP Paribas said.

© Reuters. FILE PHOTO: A man points a computer screen showing stock information in this illustration photo taken in Bordeaux, France, March 30, 2016. REUTERS/Regis Duvignau/File Photo

Deutsche Bank also polled market professionals about their intentions to return to work following the pandemic and found that around one in five people still had not returned to their office since March 2020, when the pandemic triggered lockdowns globally.

This number was even lower in the United States at one in three, Deutsche Bank said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.