Financial Market 2022: What to Expect

In a few days we will say goodbye to 2021. eToro analyst Bogdan Maioreanu commented that 2021 was a good year for the market. And we will enter an uncertain 2022. Below is a market analysis based on Bogdan Maioreanu’s point of view.

What can the stock market expect in 2022?

US and European equity markets reached new highs in 2021. This leaves investors wondering what will happen next?

Over the past 71 years, the S&P has had only five gains of more than 10% in the last two months of the year (in 1954, 1962, 1970, 1985, and 1998).

And statistically, such times lead to the market increasing with an average increase of about 18% the following year. Perhaps next year we will see the S&P 500 rise for the fourth year in a row with a rare double-digit return.

2022 will likely be the second time in 50 years that the S&P 500 will reach its target of 5,050. Beyond the statistics, we have an atypical environment characterized by high inflation, low bond yields and low interest rates. However, an investor’s portfolio must be diversified. There are many threats from the pandemic or the political situation in Europe and Asia. Global GDP is expected to grow by 4.4% next year, almost double the average of the previous decade. This supports a 10% increase in business income. International interest rates remain low and can cause stock prices to be above average.

In the United States, the value of the S&P 500 index is 30% higher than the long-term average. Many investors fear being overvalued. But the index is made up of record profits for companies, but still low interest rates. It looks like we’ll have another year of solid GDP growth and favorable market conditions for cyclical companies. Examples include companies affected by the pandemic and reopening, small-cap companies, and the financial and energy sectors.

Portfolio diversification is essential.

Europe is an exciting place.

In 2022, Europe will be an exciting place. Bogdan Maioreanu said he and his associates value European equities lower than U.S. equities. The eToro analyst said the European Central Bank is not interested in restricting asset purchases or raising interest rates. They also have a long-term budget and a post-pandemic funding program in Europe. The budget is estimated at more than €800 billion by 2027. In addition, there are plans for the fight against global warming. There are many funds for clean energy. And all these plans are for Europe, which is also interesting news for investors.

Inflation is a significant concern for investors in 2021. It is likely to remain a concern in 2022. Although next year we may see lower inflation rates as supply chains adjust. And economic growth has stabilized at a low level after the boom recorded this year.

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