Developed Markets Will Post Modest Gains in 2016

US, UK and European equities all had a lacklustre year - and the prospects for 2016 are not much better. Japan stocks had a great 2015, but expect muted gains next year

Andy Brunner 21 December, 2015 | 11:53AM

Looking at the strategists S&P 500 target levels, a better but not an especially good year is generally anticipated for US equities. With a mean value of 2245 index upside would be around 7% and, with yield and buybacks, this would produce a 10% total return. Such a capital gain appears somewhat optimistic, however, and would likely require higher than expected earnings growth to be achieved. Even then, there are numerous signs, other than generally high valuation metrics, that US equities may struggle again this year.

The UK faces a number of domestic challenges; economic slowdown, rising wage pressures and “Brexit” to navigate

Late cycle characteristics are becoming increasingly obvious, economic forecasts have eased back to a 2-2.5% range from 3% or year ago, the Fed is about to start a tightening cycle, credit spreads have widened, bond yields are expected to rise, profit margins are contracting and buybacks will become less attractive.

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Andy Brunner

Andy Brunner  is Head of Investment Strategy, Morningstar UK

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites
© Copyright 2020 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies