Tags: fidelity | earnings | revival | stock | rally

Fidelity Sees Earnings Revival Propping Up Equity Rally in 2020

Fidelity Sees Earnings Revival Propping Up Equity Rally in 2020

Friday, 13 December 2019 05:09 PM

Global earnings growth will return in 2020, boosting equities, and investor attention will shift to fiscal policy as central banks run out of ammunition to stimulate the economy, according to Fidelity International.

Stocks should improve modestly next year given expected global earnings growth of about 8% as the economy recovers, said Romain Boscher, global chief investment officer for equities. He favors shares from Europe and Japan, which tend to have lower valuations, to those from the U.S.

“2020 is a tipping point for the cyclical recovery,” Boscher said at an investor event in Singapore on Friday. “There are good reasons on the monetary side and even on the more technical side,” such as the potential for inflows.

American stocks have had a standout year, with the S&P 500 Index surging 26% through Thursday, compared with a 16% gain in the MSCI World ex-U.S. Index, as the U.S. economy held relatively steady and the Federal Reserve cut rates three times. The S&P 500 closed at a record high Thursday.

Still, Fidelity’s preference for international stocks dovetails with that of Morgan Stanley economists including Chetan Ahya, who said in a note Thursday that the fading effects of U.S. policy support will help shares in the rest of the world bounce back.

Here’s a selection of Fidelity’s other investment views:

  • Treasury inflation protected securities are among the cheapest assets in bond markets as investors remain overly pessimistic about inflation
  • Positive on local-currency emerging-market duration as high real rates allow central banks to cut borrowing costs
  • Global economy likely to avoid a recession
  • Yen looks cheap among G-10 currencies and remains a good hedge in risk-off scenarios
  • Bank stocks look attractive on valuations and could do well if there’s a resurgence in inflation

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Global earnings growth will return in 2020, boosting equities, and investor attention will shift to fiscal policy as central banks run out of ammunition to stimulate the economy, according to Fidelity International.Stocks should improve modestly next year given expected...
fidelity, earnings, revival, stock, rally
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2019-09-13
Friday, 13 December 2019 05:09 PM
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