Report
What can stop equity markets from rising?
The sharp rise in equity markets in the United States and the euro zone can in principle be stopped by: A shift to more restrictive monetary policies; but we expect real long-term interest rates to remain negative , which will instead continue to drive equity markets higher; Investor concern about high equity valuations; but as long as real interest rates are negative, investors cannot switch from equities to bonds; A decline in growth and corporate earnings, but corporate profitability is very strong and will probably withstand lower growth in 2022; A less favourable supply-demand balance for equities, but on the contrary, share buybacks are increasing and there is still a lot of liquidity to invest. All things considered, for the time being, only external shocks (geopolitical crises, wars) seem to be able to stop the rise in equity markets.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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