Wall Street equity index S&P 500 at present sits at its all-time highs of 4,479, gaining more than 21% this year currently. However, the rally could not be more than as analysts UBS Wealth Management anticipate the index to scale 5,000 by the finish of next year, gaining an additional 12% from existing levels. “Our read is that growth will stay strong for at least the next four quarters,” mentioned Mark Haefele, Global Chief Investment Officer, UBS Wealth Management. Meanwhile, the international brokerage firm reiterated its Nifty 50 target of 15,500 in June this year, seeing a tiny downside to the target. After the covid induced scare in March 2020, S&P 500 has almost doubled, jumping 94% to date.
“We now expect 45% growth in S&P 500 earnings in 2021 and think consensus forecasts for 2022 are likely to be revised upward by nearly 10%. As this earnings trajectory is confirmed, we expect the S&P 500 can reach 5,000 by the end of 2022,” Mark Haefele mentioned. The Chief Investment officer additional added that he expects prices of development and inflation to remain properly above historical norms for the next six to 12 months, and this really should continue to fuel robust corporate earnings development.
So far consumption in the US has been pushed larger by the excess savings that customers accumulated for the duration of 2020 and have been spending given that reopening. The very same has began to fade away now. However, UBS analysts think that now increasing employment figures will turn up to help customer spending. In the preceding month, nonfarm payrolls was above expectations with 943,000 new jobs. Payrolls, according to UBS are beneath pre-pandemic levels, and could develop additional.
Further, though manufacturing is at complete pace and inventories at the manufacturer level are above the pre-pandemic typical, the very same is not correct for retail inventories. “This suggests that retailers’ need to restock will be a source of real economic growth in the coming quarters,” UBS mentioned. “The customer inventory component of the ISM Manufacturing index is currently at a record low of 25. Historically, when this measure has been below 39, the headline ISM index has remained above 54 for over a year, indicating strong business sentiment and real growth,” they added.
For the existing year, UBS Wealth Management has elevated its target for S&P 500 for 2021 to 4,600 from 4,500 earlier, according to MarketWatch. This boost comes on the back of strong financial and corporate profit development, in union with a US Fed that is nonetheless-accommodative.
Meanwhile, in India, benchmark indices have scaled fresh all-time highs lately and hover about the record highs. The Nifty 50 is above 16,600 and inching closer to the all-time higher of 16,701. In the base case, UBS had pegged Nifty 50 at 15,500 though the bear case situation expects the index to fall to 13,one hundred levels. On the other hand, the bull case situation offered by UBS analysts sees the Nifty 50 at 16,700.