Stock Market Times: Global Stock Market Recovery Short-lived, 2019 outlook cut

The February 12-27 Reuters polls are the largest in a series of surveys over the past year. Respondents were over 200 equity strategists, fund managers and analysts from around the world. They remarkably lowered their forecasts for global stocks.

Equity market analysts reckon the risk is skewed more towards a sharp fall by mid-year. According to them, Global stock markets in 2019 will at least only recoup losses from the deep sell-off late last year.

A cocktail of worries drive this view, among them the ongoing U.S-China trade war, the cooling global growth, and the tightening liquidity conditions.

2018 was the worst year for most markets. The global financial crisis wiped off almost $7 trillion (5 trillion pounds) from the world stock markets. It dented optimism among the ever-bullish equity strategists.

“There are significant risks to the outlook for 2019,” noted David Kelly, chief global strategist at JP Morgan Asset Management.

“We expect 2019 to be stormy since we are still in the late phase of the economic cycle. This means that global growth will gradually slow down and that the earnings-generating ability will be challenged,” noted Fredrik Oberg, chief investment officer at SEB.

Strategists forecast the following;

• Toronto’s stock markets to make warmish gains over the rest of the year after surging since January.
• European shares to run out of steam and end 2019 roughly at their current levels. Continuous political risks and the slowing economic growth keep a tight lid on their upward potential.
• Brazilian stocks to power higher this year with investors’ faith in the Brazilian government’s economic and fiscal reforms driving it.
• Mexican stocks to make almost 11% gains.
• Indian stocks to go depending heavily on the outcome of the current military conflict Pakistan and national elections in May. Market experts say a majority win for the ruling party would be the most favorable outcome for equities.

While 2019 earnings growth estimates have been reduced across regions, equity strategists were almost equally split on whether earnings growth in their domestic markets had already peaked or will soon, versus will improve.

Stock Market Times: European shares led lower by miners on China data; AB InBev fizzes

On Thursday, European shares fell for the second day with disappointing manufacturing data from top metals consumer China. It hit miners hard as investors grew cautious about a possible U.S- China trade deal.

By 0832 GMT, the pan-regional STOXX 600 index fell 4% further retreating from an over 4-month high hit earlier this week. The trade sensitive DAX dropped 0.4%, and the commodity-heavy FTSE 100 lost 0.7%.

The mining sector was the biggest faller, down 1.8% as copper prices fell after surveys showed factory activity in China shrinking for the third straight month in February. Shares in BHP and Rio Tinto fell 2.2% and 1.8% respectively.

However, losses were broad-based. Investors became reluctant to take risks after Robert Lighthizer – the U.S Trade Representative said it was too early to predict an outcome in the trade negotiations.

Elsewhere, earnings updates were in focus.

AB InBev rose 4.6%, leading to blue-chip gainers in Europe following the world’s largest brewer forecast strong revenue and profit growth in 2019. It focused on increasing beer sales rather than just prices.

Two big multinationals; cigarette maker- the British American Tobacco (LON: BATS) and Swiss engineer ABB  fell around 2% following their earnings update.

Sunrise was down 10% becoming the biggest loser in Europe. The loss came after it agreed to buy Liberty Global’s Swiss unit in a 6.3 billion Swiss francs deal to create a bigger challenge to Swisscom.

Zalando gave a promising outlook in Europe’s biggest online-only fashion retailer. It drove shares to the top of the STOXX 600 up 16%.