Our Outlook for Different Sectors

Quarter-End Insights: Morningstar examines the prospects for energy, financial services and more

Morningstar 28 March, 2012 | 2:46PM

After giving you our forecasts for equity markets and credit markets, Morningstar analysts have worked together to create some point form notes about the outlook for various equity sectors:

Our Outlook for Energy
• Geopolitics dominate oil markets, masking an underlying supply tightness and supporting high prices.
• US natural gas prices collapsed further this quarter, a sign in our eyes that E&Ps have finally capitulated. Now all that's left is the pain, as the industry works its way through the supply glut.
• Producers might not be quick to switch back to gas drilling, given the economics in liquids plays. This might support higher gas prices during the next several years, as we think producers will require strong pricing signals before once again ramping up gas production.

Our Outlook for Financial Services
• An extended rally in financial-services stocks, especially in the US, has drastically reduced the number of bargains in the sector.
• Emergency liquidity provisions have lessened the chances of a funding crisis in Europe, but the sovereign debt crisis is not over.
• Hints of an economic recovery have improved the prospects for rate-sensitive names.

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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.

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