With interest rates at historic lows around the globe it is very interesting to see the Economic and Market forecasts from the major investment banks for 2010. Set against the backdrop of the gloomy outlook of Irish investors at present the outlook in the US and Europe is decidedly more upbeat.
Already Global stock markets have performed extremely strongly since March 2009 with the MSCI World index up +60%. According to Goldman Sachs, the rally is going to continue in 2010 and is looking at 15%+ equity returns for the year.
JP Morgan is also bullish. It forecasts a +20% return for Developed Market equities and +30% return in Emerging Market equities. Merrill Lynch, are also equally bullish. They foresee a potential 30% upside in equity market in the year ahead. Expectations for corporate profits are at their highest level since late 2003.
European banks are slightly less optimistic. Barclays Capital expect a sharp rally for equity markets in the first half of the year followed by some sideways corrective behaviour in the latter half of 2010. Deutsche Bank believes that 2010 will be characterised by a gradual easing in stimulus and easy money policies. Momentum will begin to grow in the first half of 2010 which will allow policy makers to tighten interest rates around the globe. In this scenario, Deutsche Bank expects risky assets to continue to perform well.
Many of the large global Banks expect markets to perform well in 2010 as low interest rates, continued stimulus and strong earnings will continue to bolster risky assets. This has led to some very interesting forecasts with banks forecasting equity market returns in 2010 of between 15% and 30%. Will this lift the fear amongst some Irish investors?