US Market Outlook 2023: Factors that may lead to rebound in US equities next year

Dollar is on fire

US stock market investors are looking for indicators that may result in a rebound in share prices in 2023. From inflation, Treasury yields, and dollar strength to jobs data and producers’ price index amongst several other data, investors are keeping a close watch on them for any cues that can bring the bullish sentiments back in the markets. On the other hand, many stock market analysts are of the view that the real impact of Fed rate hikes could be seen in the first half of 2023. In an exclusive interview with Financial Express Online, Ashwin Patni, Head Products & Alternatives, Axis AMC talks about the outlook for the US stock market in 2023 and the factors that may lead to a rebound in US equities next year.

Global equities remain under pressure amidst geopolitical tensions, high inflation, tightening monetary policy, and ultimately earnings risks that look inevitable as the economic cycle slows. Inflationary pressures have exerted a strain on discretionary spending and with central banks remaining focused on combatting inflation, interest rates have been rapidly rising, further weighing on consumer confidence.

Recent events in credit markets have only served to highlight the vulnerability of equity markets to policy action and disappointing data on inflation and growth. Going forward, while material economic challenges remain, inflation may be less entrenched and the economic downturn less severe than many envisage.

We believe the market will be looking for an eventual trough in earnings revisions and a peak in interest rates to signal the start of a new cycle.

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