US exceptionalism “has become the market norm”, strategists at the firm said, and they see no reason to shift away from US equities.
“The riskier parts of every asset class have outperformed in 2024 so far, yet we find the market moves to be based on rational optimism and not exuberance,” according to Alain Bokobza and other strategists at the firm.The strategists said they’ve lifted their year-end target for the S&P 500 to 5500 from 4750 and “extend our bullish bias for US stocks”.
The first is earnings where global markets, except for China, are rising amid a “robust” earnings cycle. The strategists pointed to the US: “The 20 per cent EPS growth that we pencilled into our 2024 outlook for the period between 2024 and 2025 is exposed to upside risk. The tech-heavy Nasdaq-100 is still the largest driver of this and the EPS cycle.”
As for what could go wrong, the strategists flag the potential for inflation to re-accelerate. They point to the outlook for oil and. With regard to oil, the strategists said their central scenario assumes there’s little interest in OPEC and its allies in lowering output, a downside risk for prices. The latest weekly survey of the American Association of Individual Investors found optimism about the six-month outlook for US stocks at 43.2 per cent, slightly lower than last week. However, bullishness is above its historical average of 37.5 per cent for the 20th consecutive week.
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