The global equities market is experiencing a positive shift due to favorable economic indicators and strategic policy interventions.
Recent data revisions in the United States show that GDP growth has exceeded previous expectations, averaging 2.5% annually since 2019. This, along with a global rate-cutting cycle, is creating a more positive environment for stock markets worldwide.
Analysts are optimistic about earnings growth, with projections indicating an 11% increase in S&P 500 earnings per share (EPS) this year, followed by 8% growth in 2025. The technology sector in the U.S. is particularly attractive, with opportunities in artificial intelligence. Financials, technology, and utilities are highlighted as sectors with significant growth potential.
The S&P 500 is projected to reach a price target of 6,600 by December 2025. In addition to the U.S. market, smaller and mid-sized companies in the Eurozone are gaining attention. The macroeconomic environment in Europe is improving, with strong consumption and easing financing conditions. European small and mid caps are currently trading at a 20-year low price-to-earnings ratio, making them an appealing investment opportunity. Asian equities, excluding Japan, are also becoming attractive. The region is sensitive to declining interest rates, both in the U.S. and locally, which could make it more appealing to investors.
After two challenging years, global earnings are recovering, with forward earnings expectations improving. Analysts project a 10% EPS growth for the MSCI AC World index in 2024 and similar growth in 2025.
Historically, U.S. equities have shown a tendency to rise significantly within 12 months following the Federal Reserve's initial rate cut during periods of soft landings. The potential for Chinese stimulus could further boost global stock markets.
Investors are encouraged to consider opportunities in the U.S., Eurozone small and mid caps, and Asian equities as the economic landscape evolves. The combination of resilient growth, robust earnings, and strategic policy measures is creating a more optimistic outlook for global equities, prompting investors to reassess their portfolios.