Oil rises 1% ahead of inflation data after downbeat week

HOUSTON, May 27 – Oil prices rose over 1% in muted trade owing to public holidays in Britain and the United States after a downbeat week characterized by the outlook for US interest rates in the face of sticky inflation.

The Brent crude July contract settled USD 1, or 1.2% higher at USD 83.12 a barrel. The more active August contract rose USD 1.04 to USD 82.88.

US West Texas Intermediate (WTI) crude futures CLc1 were up 93 cents at USD 78.65.

Brent lost about 2% last week and WTI nearly 3% after Federal Reserve minutes showed some officials would be willing to raise interest rates further if it were deemed necessary to control stubbornly high inflation.

“Sentiment in the oil complex … has been skittish as investors are constantly recalibrating expectations for the Federal Reserve’s monetary policy trajectory,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.

Recent data emanating from Western economies has shifted rate cut expectations depending on geography.

On Monday, key European Central Bank (ECB) policymakers said the bank has room to cut interest rates as inflation slows but must take its time in easing policy.

Figures for inflation in the euro zone are due on Friday and economists believe an expected tick up to 2.5% should not stop the ECB from easing policy next week.

The US personal consumption expenditures index expected this week will be in the spotlight for further signals about interest rate policy. The index, due to be released on May 31, is viewed as the US Federal Reserve’s preferred measure of inflation.

German inflation data on Wednesday and euro zone readings on Friday will also be watched for signs of a European rate cut that traders have pencilled in for next week.

Eyes will also be trained on the coming meeting of the OPEC+ group of oil producers comprising the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia. The meeting is to take place online on June 2.

An extension to output cuts of 2.2 million barrels per day is the likely outcome, OPEC+ sources have said this month.

Goldman Sachs raised its global oil demand forecast for 2030 on Monday and expects consumption to peak by 2034 on a potential slowdown in electric vehicle adoption, keeping refineries running at higher-than-average rates till the end of this decade.

(Reporting by Arathy Somasekhar in Houston, Natalie Grover in London, Colleen Howe in Beijing and Mohi Narayan in New Delhi. Editing by David Goodman, Sharon Singleton, Rod Nickel and Diane Craft)

Dollar down on profit-taking but upbeat outlook remains

NEW YORK – The dollar slipped against most major currencies on Friday as traders booked profits after recent gains but the US currency remained well-placed for further advances, supported by strong US economic data that has prompted markets to dial back expectations for interest rate cuts.

Data on Friday showed new orders for key US-manufactured capital goods rebounded more than expected in April and shipments of these goods also increased, suggesting a pickup in business spending on equipment early in the second quarter.

This follows Thursday’s data that showed US business activity in May accelerated to the highest level in just over two years and manufacturers reported surging input prices.

Minutes from the Federal Reserve’s last meeting published this week showed a lively debate among policymakers as to whether current rates were sufficiently restrictive to cool inflation.

The dollar was down 0.3% at 104.72 against a basket of currencies on Friday, after advancing in five of the last six trading sessions. For the week the index was up 0.2%.

The euro was up 0.3% at USD 1.08495 late on Friday.

“Investors are just now taking the opportunity to reflect back on the week and take some profits … it’s really purely a positioning play,” said Boris Kovacevic, global market strategist at payments company Convera in Vienna.

While stronger-than-expected US economic data has led traders to push out the timing of the first Fed rate cut to September, expectations for rate cuts by other central banks have also slipped.

“For as much as expectations of easing from the Federal Reserve have cooled off over the last week, it’s a similar story for central bankers around the world – ECB rate cut changes have also downshifted after lots of official commentary since Monday,” said Helen Given, FX trader at Monex USA in Washington.

Despite Friday’s retreat, the near-term outlook for the dollar was upbeat, analysts said.

“This theme of the US exceptionalism is still playing out,” Convera’s Kovacevic said.

The dollar is up almost 1% this week on the Japanese yen to 156.95 yen, even though Japanese government bond yields have climbed too, scaling decade highs and clearing 1% at the 10-year tenor.

Japan’s core inflation slowed for a second straight month in April, meeting market expectations – and staying above the central bank’s target – at 2.2%.

“It’s having very little effect on the yen,” said Martin Whetton, head of financial markets strategy at Westpac in Sydney. “The carry of holding dollars is far juicier,” he said, while policymakers’ rhetoric has also made traders nervous about inflation and the risk rate cuts would be distant or small.

The pound rose 0.3% to USD 1.27365 on Friday.

Data showed wet weather hit UK consumer spending far more than expected in April, but evidence of sticky inflation, and the surprise announcement this week of a July general election kept sterling near two-month highs.

China started a second day of war games around Taiwan. China’s yuan held steady in the offshore market at around 7.2627.

The New Zealand dollar was up 0.4% at USD 0.61225, underpinned by a hawkish shift in outlook from the Reserve Bank of New Zealand.

Among cryptocurrencies, ether was about flat at USD 3,735.90, on Friday, a day after the US Securities and Exchange Commission approved applications from Nasdaq, CBOE and NYSE to list exchange-traded funds (ETFs) tied to the price of ether, potentially paving the way for the products to begin trading later this year. For the week, ether is up about 20%.

(Reporting by Saqib Iqbal Ahmed in New York; Additional reporting by Amanda Cooper and Tom Westbrook in Singapore; Editing by Shri Navaratnam, Chizu Nomiyama, Matthew Lewis and Diane Craft)

Inflation data, presidential debate could sink summer rally

NEW YORK – The typical summer slowdown in US stock markets may be more pronounced this year with inflation jitters and an early presidential debate that have the potential to weigh on a rally that has pushed the S&P 500 near record highs in recent months.

The S&P 500 is up nearly 12% this year on strong earnings and signs inflation may be falling enough for the Federal Reserve to cut benchmark interest rates, but that rally is unlikely to continue in the months ahead, investors said.

Summer has historically been the slowest season for US stocks. The benchmark S&P 500 has risen 56% of the time between June through August, according to data from CFRA Research dating back to 1945. Traders on vacation and investors waiting for fall corporate earnings before committing to next year’s asset allocations are often cited as reasons for the summer doldrums.

This summer brings extra headwinds, though, with ongoing uncertainty over the timing of rate cuts and the unknowns of the US presidential election expected to drive some choppiness.

“Markets are pretty richly valued at this point, and everything has to go right between now and July for the Fed to deliver any interest rate cuts,” said Sameer Samana, senior global market strategist at the Wells Fargo Investment Institute.

“We don’t see a lot of potential catalysts for more gains, so there’s a good chance that the seasonal slowdown we typically see will be turbocharged this year.”

Inflation data will be the key driver of the market for the rest of the year, determining the path of Treasury bond yields and their relative attractiveness compared with stocks.

The S&P 500 is currently trading at a forward price-to-earnings ratio of 21.6 compared with roughly 17.5 in October when 10-year Treasury yields hit near two-decade highs.

Hotter-than-expected inflation data early this year dampened expectations for Fed rate cuts in 2024, pushing yields broadly higher. Then a dip in the rate of price increases in April was widely seen as giving the Fed cover to ease, with the market now pricing in a 35 basis point cut by the end of December.

But another hot reading in June or July could dash those hopes. The next personal consumption expenditures report is expected on Friday, while the next consumer price index report is expected on June 12.

“The real challenge will be on the relative side. If yields were to spike and if it looks like the Fed isn’t going to cut, then investors will move into bonds and cash,” said Ed Clissold, chief US strategist at Ned Davis Research.

At the same time, global fund managers have their highest stock allocation since January 2022, according to BofA Global Research. “When everybody is long, there’s nobody left to buy,” said Giuseppe Sette, president of market research firm Toggle.

TIGHT RACE

This year’s election race between President Joe Biden, a Democrat, and Republican former President Donald Trump is another unknown.

The S&P 500 has advanced between Memorial Day and Labor Day 75% of the time when a first-term president is running for reelection, said Sam Stovall, chief investment strategist at CFRA Research. But this year’s race is extremely tight with Biden largely tied with Trump in national opinion polls.

The pair have also agreed to a June 27 debate. That would mark the earliest-ever general election debate in a presidential race, focusing investor attention on the potential outcome and policy implications of the race much earlier than usual.

“This looks like it will be a fairly tight presidential election, so getting some kind of pullback as investors move to the sidelines is quite possible,” said Clissold.

(Reporting by David Randall; editing by Michelle Price and Jonathan Oatis)

Gold loses momentum on ebbing rate cut speculation

Gold prices rose on Friday as the dollar slipped, but were headed for their worst week in five and a half months as hopes of interest rate cuts by the US central bank tamed.

Spot gold rose 0.2% to USD 2,332.77 per ounce as of 1:54 p.m. ET (1754 GMT) as the US dollar index slipped 0.4%, making gold relatively less expensive for other currency holders.

US gold futures settled 0.1% lower to USD 2,334.50.

Bullion hit a record high of USD 2,449.89 on Monday, but has shed more than USD 100 since then and is on track for a 3% drop this week, its worst weekly dip since early December.

“What we’ve always had was a little bit of a lack of interest from the Western investors on uncertainty over when the Fed will cut rates…once the Fed cuts rates, they would increase exposure again,” said Michael Widmer, Bank of America’s head of Metals Research.

Minutes from the Federal Reserve’s last meeting published this week showed the central bank’s path to 2% inflation could take longer than expected.

Traders’ bets signaled growing doubts that the Fed would cut rates more than once in 2024, currently pricing in about a 63% chance of a rate cut by November according to the CME FedWatch Tool.

Higher interest rates make non-yielding gold a less appealing investment.

Despite uncertainty around the US rate outlook, gold prices managed to gain 13% so far this year, largely on the back of strong Chinese demand and ongoing geopolitical uncertainties, analysts have noted.

However, “there is a risk now that you might see somewhat lower gold purchases from the Chinese retail investors into the second half of this year, as the government is putting much more effort into reflating the economy. If that happens, you then revert back to the demand from the Western investors- taking us back to the discussion about the Fed rate cuts,” Widmer said.

Spot silver rose 0.5% to USD 30.25. It hit an 11-year high on Monday.

Platinum rose 0.8% to USD 1,027.25, while palladium fell 0.7% to USD 962.50. All three metals were headed for weekly losses.

(Reporting by Harshit Verma in Bengaluru; Editing by Vijay Kishore)

Japan issues fresh warning on yen drops, signals readiness to intervene

STRESA, Italy – Japan stands ready to take appropriate action in the market “any time” to counter excessive moves in the yen, its top currency diplomat Masato Kanda said on Friday, issuing a fresh warning on the chance of renewed exchange-rate intervention.

Kanda also said he was in frequent and close contact with overseas counterparts, particularly in the US, on issues including financial markets.

“Under a flexible exchange-rate regime, we won’t need to intervene if currency moves are stable. But if there are excessively volatile moves that have an adverse effect on the economy, we need to take action, and doing so would be justified,” Kanda told reporters.

“We are ready to act any time as needed against currency moves,” he said after accompanying Japanese Finance Minister Shunichi Suzuki for the first-day session of the G7 finance leaders’ meeting in the northern Italian city of Stresa.

Kanda made his remarks a day after US Treasury Secretary
Janet Yellen
said currency interventions should be used only rarely and in a well-communicated way.

At the Group of Seven meeting, Japan told its counterparts that vigilance was needed against excessive volatility in the currency market that was driven by speculative moves, Kanda said.

Japan also told the meeting it was important to “respond appropriately” to excessive, disorderly moves in the currency market that would hurt the economy, he added.

Japan will push for the G7 finance leaders’ communique to include language reaffirming the group’s stance that excessive and volatile currency moves were undesirable, he said.

Kanda, who oversees Japan’s currency policy as vice finance minister for international affairs, declined to comment when asked about the yen’s recent declines.

The yen has lost 11% against the dollar this year on expectations the US Federal Reserve will be in no rush to cut interest rates, which would keep the divergence between US rates and Japan’s ultra-low rates large.

SUSPECTED INTERVENTION

A weak yen has become a headache for Japanese policymakers as it hurts consumption by inflating the cost of raw material imports.

Japan is suspected to have intervened in the currency market to prop up the yen on April 29 and May 2 to arrest what authorities described as excessive, speculative currency moves.

While the suspected intervention has kept the yen from falling below the psychologically important 160-to-the-dollar line, the Japanese currency has yet to stage a clear rebound. It stood at 156.98 to the dollar on Friday, not far from the more than three-week low of 157.19 touched on Thursday.

Markets see the 160-to-the-dollar level as a line in the sand for authorities that heightens the chance of yen-buying intervention. Tokyo stepped into the market when the Japanese currency slid below that level.

The G7 group of advanced nations share a common understanding that stable currency moves are desirable and that countries have the authority to take action in the market when exchange-rate moves become too volatile.

Tokyo has argued this G7 agreement gives it freedom to intervene in the currency market to counter excessive yen moves.

(Reporting by Leika Kihara; Editing by Hugh Lawson and Paul Simao)

Checking pulse of China profits, eyeing yen action

Trading volume and activity across Asia on Monday will be among the lightest this year owing to the US and UK public holidays, but markets are open and there is no shortage of issues for investors to chew on.

The economic calendar sees the release of Chinese industrial profits figures for April and trade data from Hong Kong, while South Korea hosts a trilateral meeting in Seoul with China and Japan.

With the world’s two biggest FX trading centers London and New York both closed, yen traders may be on intervention alert. Japan’s last two suspected bouts of yen-buying action recently came in extremely illiquid hours of the global day, one of which was May 1 when many countries’ markets were shut.

The dollar is back up at 157.00 yen, and the latest Commodity Futures Trading Commission figures show that after three weeks of reducing short yen positions, speculators are now loading up on them again.

Could Tokyo be tempted to catch the market off guard again?

While trading volume will be thin in Asia on Monday, the global investment backdrop remains constructive. Although bond yields are rising and central banks are leaning increasingly hawkish, markets remain buoyant.

In large part, this is being led by US developments – strong earnings, solid growth, and extremely subdued volatility. Indeed, a key driver of the bullish momentum globally is the low level of volatility.

The Chinese investment picture, of course, is less rosy, and perhaps not coincidentally, China-Taiwan tensions are rising.

Downward pressure on the yuan’s exchange rate appears to be building again. The spot yuan just had its biggest weekly fall against the dollar since mid-March, and the central bank’s daily dollar/yuan fixing rate on Friday was above 7.1100 for the first time since January.

Foreign direct investment into China in January-April plunged nearly 28% from the same period last year, and Goldman Sachs analysts estimate that FX outflows in April accelerated to USD 86 billion from a USD 39 billion outflow in March.

While many benchmark equity indexes around the world have shot to new highs recently, and Hong Kong’s Hang Seng rebounded as much as 20%, Chinese stocks have found the going much tougher.

And China’s economic surprises index has continued to inch lower in recent weeks too – on Friday it slipped to its lowest level since February 8.

All that comes despite Beijing taking fresh steps to address the property sector crisis. The week ahead is a quiet one in terms of Chinese economic indicators, but April industrial profits on Monday is a big one for investors.

Profits fell in March, complementing a slew of economic indicators for the month such as retail sales and industrial output that pointed to frail domestic demand.

Here are key developments that could provide more direction to markets on Monday:

– South Korea, Japan, China trilateral meeting

– China industrial profits (April)

– Hong Kong trade (April)

(Reporting by Jamie McGeever; Editing by Josie Kao)

What to expect as US moves towards faster stock settlement

NEW YORK – US markets are set for an upheaval on Tuesday, May 28, when the settlement time for US equities, corporate municipal bonds, and other securities will be halved to one day, or T+1, following the adoption of a new Securities and Exchange Commission (SEC) rule in February 2023.

Here is what to expect:

WHAT IS SETTLEMENT?

A trade settlement occurs when the buyer receives the security and the seller is paid. This final stage is handled by the Depository Trust Company (DTC), a subsidiary of the Depository Trust and Clearing Corporation.

WHAT DOES SPEEDING UP SETTLEMENT MEAN FOR MARKETS?

Regulators hope a faster settlement process will reduce risk and improve efficiency in the world’s largest markets, as investors will get their money and securities sooner. Currently, as trades take two days to conclude, there can be hiccups before investors receive their money or securities.

A trading frenzy around the “meme stock” GameStop GME.N in 2021 highlighted the need to reduce counterparty risk and improve capital efficiency and liquidity in securities transactions. SEC Chair Gary Gensler said the change would make the US market infrastructure more resilient, timely, and orderly.

HOW IS IT GOING TO BE IMPLEMENTED?

Over the coming weekend, market participants will be preparing to start settling trades in one day on May 28, instead of two. Although they have been testing faster settlement since at least August 2023, this weekend will be critical.

A virtual command center has been created to monitor the implementation and communicate potential issues. Over 1,000 people will join multiple daily calls, said Tom Price, managing director at trade association Sifma.

The conversion of the Depositary Trust and Clearing Corporation (DTCC) to T+1 will be a central part of the shift to faster settlements, as it provides clearing and settlement services for Wall Street, but all market participants will have to adjust, from banks to asset managers and custodians.

IS THE US THE FIRST COUNTRY TO MOVE TO T+1?

No. Trades in India are being settled one day after the trade, after the country’s Securities and Exchange Board completed its phased-in transition in January 2023. Now India has set its sights on same-day settlement, joining China where stock settlement is T+0 and T+1 for cash settlement.

Canada, Mexico, and Argentina will also shift to a one-day settlement on May 27, one day before the US

Alejandro Félix, president of the AMIB’s (Mexican Association of Stock Institutions) Administration Committee, said Mexico decided to speed up T+1 to preserve the correlation with the US

WHO COMES NEXT?

Britain’s stock markets plan to shift to T+1 by the end of 2027, while the European Union has said it is also looking to follow the US, but the timing has not been announced.

WHAT ARE THE CHALLENGES?

Financial firms will have less time to line up dollars to buy stocks, recall shares out on loan, or fix transaction errors, which could heighten the risk of settlement failures and raise transaction costs. The foreign exchange market, for instance, still settles in two days.

WHAT MAY GO WRONG?

As market participants adjust to faster settlements, they expect a temporary increase in trade fails. This happened in September 2017 when the settlement period was reduced from three to two days, according to Sifma.

The SEC said “a shorter settlement cycle may lead to a short-term uptick in settlement fails and challenges to a small segment of market participants.”

Research firm ValueExchange found in a survey that market participants expect the trade fail rate to increase to 4.1% after T+1 implementation from 2.9%. Sifma expects a minimal rise in the fail rate which would be resolved quickly, Price said.

(Reporting by Carolina Mandl in New York; Additional reporting by Laura Matthews in New York, and Noe Torres in Mexico City; Editing by Megan Davies and Richard Chang)

Gold slips to over one-week low on hawkish Fed, US data

Gold fell to more than a week’s low on Thursday, extending its decline for a third straight session, as investors grew apprehensive over US rate cut timings and on strength in US business activity.

Spot gold fell 1.8% to USD 2,336.39 per ounce, its lowest since May 13, as of 1748 GMT. US gold futures settled 2.3% lower to USD 2,337.20 per ounce.

The non-yielding bullion hit a record high of USD 2,449.89 on Monday and is up 14% so far this year.

Making gold less attractive, the dollar cut its losses for the day on US business activity accelerating to the highest level in over two years in May, suggesting that economic growth picked up halfway through the second quarter.

Advancing dollar and a weakening US rate cut outlook have catalyzed a round of profit-taking in gold, but the downside will be limited, said Daniel Ghali, commodity strategist at TD Securities.

While the policy response for now would “involve maintaining” interest rates at current levels, the latest Fed minutes reflected discussions of possible hikes.

“Investors that care about the Fed outlook actually aren’t all that long in gold. They’ve missed the rally and in turn, don’t have that much gold to sell. So while we do think the gold prices are staging a correction here, but that will be relatively shallow,” Ghali said.

UBS raised its gold price forecasts to USD 2,600/oz for 2024-end and recommended buying on dips at around USD 2,300/oz or below, citing a series of softer US data for April, an upwardly revised central bank demand for gold and ongoing geopolitical uncertainties.

Meanwhile, imports to India, the world’s second-biggest gold consumer, could fall by nearly a fifth in 2024 as high prices spur retail consumers to exchange old jewelry for new items, according to an industry body.

Spot silver fell 1.8% to USD 30.22. The recent rally in gold and copper prices drove it to USD 32.5, an 11-year high, earlier this week.

Platinum was down 1.4% at USD 1,020.35, while palladium lost 3.5% to USD 964.75.

(Reporting by Harshit Verma and Rahul Paswan in Bengaluru; Editing by Shilpi Majumdar and Alan Barona)

US SEC approves exchange applications to list spot ether ETFs

The US Securities and Exchange Commission (SEC) on Thursday approved applications from Nasdaq, CBOE and NYSE to list exchange-traded funds (ETFs) tied to the price of ether, potentially paving the way for the products to begin trading later this year.

While the ETF issuers also have to get the green light before the products can launch, Thursday’s approval is a major surprise win for those firms and the cryptocurrency industry, which until Monday had expected the SEC to reject the filings.

Nine issuers including VanEck, ARK Investments/21Shares, and BlackRock hope to launch ETFs tied to the second-largest cryptocurrency after the SEC in January approved bitcoin ETFs in a watershed moment for the industry.

“This is an exciting moment for the industry at large,” said Andrew Jacobson, vice president and head of legal at 21Shares, noting it was “a significant step” towards getting the products trading.

Thursday was the deadline for the SEC to decide on VanEck’s filing. Market participants were bracing for the thumbs-down because the SEC had not engaged with them on the applications.

But in a surprise move, SEC officials on Monday asked the exchanges to quickly fine-tune the filings, sending the industry scrambling to complete weeks of work in just days, sources said.

Reuters could not ascertain why the SEC appeared to have a change of heart.

“The introduction of spot bitcoin ETFs has already demonstrated significant benefits for the digital assets and ETF space, and we believe that spot ether ETFs will similarly provide safeguards for US investors,” said Rob Marrocco, global head of ETP listings at Cboe Global Markets.

Nasdaq and NYSE declined to comment.

When asked about the ether ETFs by reporters at an industry event earlier on Thursday, SEC Chair Gary Gensler – a crypto skeptic – declined to comment. An SEC spokesperson said in an email announcing the approval that the agency would not comment further.

The exchange applications had sought SEC approval for a rule change required to list new products, but the issuers still need the SEC to approve ETF registration statements detailing investor disclosures before they can start trading.

Unlike the exchange filings, there is no set time frame in which the SEC has to decide on those statements. Industry participants said it was unclear how long that would take. Two sources familiar with the process said many issuers are ready to launch, but the corporate finance division of the SEC has indicated it is likely to request changes and updates in the coming days and weeks.

The SEC rejected spot bitcoin ETFs for more than a decade over market manipulation worries but was forced to approve them after Grayscale Investments won a court challenge last year.

Sui Chung, CEO of CF Benchmarks, the index provider for several of the bitcoin and ether ETFs, said ether is more complex than bitcoin and it could take months for the SEC to review the statements. But since the bitcoin ETFs offer an established template, “there’s only so much slow rolling” the SEC can do, he said.

An array of investors, including hedge funds, wealth advisors and retail investors, have poured more than USD 30 billion into the crypto ETFs.

Thursday’s decision is another tailwind for cryptocurrency industry efforts to push into mainstream finance. This week the UK regulator also approved listed cryptocurrency products while the US House of Representatives passed a landmark bill seeking to provide regulatory clarity for cryptocurrencies.

While that bill still needs to pass the Senate, its extensive bipartisan support marks a major endorsement for the industry.

(Reporting by Hannah Lang in New York and Suzanne McGee; additional reporting by Douglas Gillison; Editing by Michelle Price, Leslie Adler, and Rod Nickel)

Global stocks fatigued from bull run, but no correction expected

BENGALURU – The global equity bull run is showing signs of fatigue, with most major stock indexes not expected to repeat last year’s stellar performance, according to a Reuters poll of stock analysts who also said a near-term correction was unlikely.

With financial markets paring back 2024 rate cut expectations from major central banks and most stock indexes already trading close to lifetime highs, further gains were expected to come at a much slower pace.

A resilient global economy, an ongoing boom in technology stocks and their considerable weight in equity indexes, especially in the US, are likely to prevent any major drop in stock prices in the near-term, the poll forecast.

A strong 60% majority of analysts, 51 of 85, who answered an additional question in the May 13-22 poll said a correction of 10% or more over the coming three months was unlikely (41) or highly unlikely (10). The remaining said likely (23) or highly likely (11).

“The significant gains seen in many stock markets over the last few months have made our portfolio managers a little more cautious on the outlook…Fading prospects for interest rate cuts, such an important driver of the market rally, also give us further pause for thought,” said Paul Quinsee, head of global equities at JP Morgan Asset Management.

“But fundamentals of corporate profits still look good… Globally, this looks like a much better year for profit growth after a lackluster period post-COVID.”

Indeed, of the 15 stock market indexes surveyed, on only Britain’s FTSE was expected to achieve last year’s performance. In 2023 nearly all of them gained more than 10%.

“Equity return expectations in 2024 should stay muted – 2023’s double-digit market returns will be hard to duplicate,” said Daniel Morgan, senior portfolio manager at Synovus Trust, adding that stocks “are priced for perfection”.

The benchmark S&P 500 index, which sets the tone for global portfolio flows and is one of the best performers this year with a more than 11% gain, is forecast to end 2024 near current levels.

Japan’s NIKKEI index, up more than 15% for the year, was predicted to add another 5% in the second half of 2024. If realised, this would be the second year in a row where the index has outperformed most of its peers.

European and British stocks, which had a good run this year as both Britain and euro zone economies escaped a recession, were either predicted to make little headway or shed a little from here by the end of the year.

The Euro STOXX 50 index, France’s CAC 40 and Spain’s IBEX which are up 11.6%, 7.9% and 12.2% respectively this year, were forecast to gain another 1-2%.

Britain’s FTSE, the European STOXX 600 and Germany’s DAX index were seen falling 1.4%, 1.9% and 0.2%, respectively, between now and year-end.

Despite high valuations, India’s benchmark BSE index was forecast to lead its peers and gain more than 8% for the remainder of the year. The Sensex was already up more than 2% for the year.

(Reporting by Hari Kishan; Additional reporting and polling by correspondents in Bengaluru, Buenos Aires, London, Mexico City, Milan, New York, San Francisco, Sao Paulo, Tokyo, and Toronto; Editing by Ross Finley and Alex Richardson)

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