What will be the dynamics of the stock market this year? This question interests millions of people around the world. We will try to understand this issue, using the expert opinions of various specialists.
The Main Factors Influencing the Stock Market in 2022
According to experts of the rating of stockbrokers in France, brokerschart.fr, there are 4 main factors that will most strongly influence the development of the stock market in the year of the tiger. Among them are:
- inflation;
- decarbonization;
- pandemic;
- news from China.
These factors can affect stock quotes both positively and negatively. Let’s take a closer look at each of the above aspects and what impact it can have on the stock market.
Inflation
Inflation is called one of the decisive factors of this year by experts from many agencies, in particular Bloomberg. Bloomberg experts believe that we should not expect high inflation rates this year, because the scenario for reducing inflationary pressure is already taken into account in current prices.
On the other hand, if this scenario is not effective, the stock market is waiting for a massive decline in quotations, as a result of news about the decline in profits of most companies. And although such an option is considered less likely, you should also be prepared for it.
High inflation will force central banks to tighten monetary policy, pushing up borrowing costs for heavily indebted countries.
Decarbonization
According to brokerschart.de experts, decarbonization could be one of the reasons for high inflation in 2022.
Higher carbon prices and environmental taxes increase production costs for industrial enterprises. The trend towards green energy reduces investment in fossil fuels, which leads to a sharp increase in energy prices.
On the other hand, decarbonization creates unprecedented investment opportunities. As an example, the experts cite Tesla, whose shares have grown by more than 1000% since the beginning of last year. This company is just known for its investments in sustainable energy.
Coronavirus
Coronavirus will continue to negatively affect the stock market, regardless of the emergence of new strains or the complete cessation of the pandemic.
In the first case, the tightening of quarantine restrictions will cause a slowdown in the growth of quotations. In the second one, it will lead to the curtailment of state programs of fiscal and monetary stimulus — the two main drivers of the market this year.
Situation in China
In general, experts consider China to be a significant driver of stock market growth. The peak of tightening regulation in the country has already passed and the Chinese authorities are taking more measures to stimulate the economy, which will begin to affect it in 2022. As a result, experts expect growth in profits and valuations of Chinese corporations.
Unlikely Forecasts
Investment bank Saxo Bank at the end of each year publishes the traditional shocking forecast for the next year, which lists unlikely events (so-called black swans) that, if they occur, will have a significant impact on financial markets or world politics.
Forecasts for 2022 include:
- Revisiting our fossil energy policy — faced with rapidly rising energy prices, policymakers will make a surprise move in 2022 to temporarily ease environmental restrictions on new investment in oil and natural gas.
- Falling popularity of Facebook — investors will realize that Meta (Facebook) is losing the younger generation and therefore the future potential and profitability of the company.
- Army of women investors — a group of female traders, emulating the events on the Internet platform Reddit, will launch a coordinated attack on companies with low gender equality scores, causing their stock prices to fluctuate.
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