Global stocks have further to run this year, but the likelihood of a correction ...
BENGALURU - Global stocks have further to run this year, but the likelihood of a correction of 10% or more is high, according to Reuters polls of market strategists, with the severity of the economic hit from the coronavirus outbreak being the biggest risk.
However, all but one are in the red so far this year, with most losses sustained over the past five trading days amid fears that the coronavirus outbreak will become a pandemic, disrupting supply chains and dealing a major hit to the global economy. Still, the bull run in global stocks was expected to extend for at least another six months, according to 74 of 100 analysts in response to an additional question. Nearly 60 of those said it would last more than a year.
What is notable in this survey is that ever-bullish equity strategists are slightly more pessimistic and less confident than in previous polls. That suggests expectations for monetary policy to be deployed again to head off any economic downturn would not favour stock markets as it did last year. “Nothing has changed since last week. What we learned in 2008 - as well as in 1929, 1971, 1982 and 1998 - is that a highly leveraged financial system is vulnerable in many ways to an exogenous shock. The coronavirus and the policy response to it are exactly that kind of exogenous shock.”
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