Morgan Stanley: the stock market will not hold on to heights

It is predicted by Morgan Stanley that the US stock market will experience a decrease of 9% by the end of 2020.

It is predicted that European stocks will experience a 10% decrease this summer.

The US Federal Reserve's tightening of monetary policy and the strengthening of the dollar will have a negative impact on the stock market.

The Japanese stock market may not be done growing; in fact, it may continue to increase.

RBC reports that Morgan Stanley bank anticipates the S&P 500 index to drop to 3900 points by the end of the year, which is roughly 9% lower than the present levels.

The US Treasury will issue bonds in order to replenish the budget following the agreement on the national debt ceiling. This could result in a decrease in liquidity from risky assets, a decrease in economic growth, and a stronger US dollar.

The bank expects and advises that, due to a decrease in revenue growth and further margin shrinkage, corporate profits of companies will drop by 16% in 2023. They suggest looking into stocks of companies in defensive sectors of the economy and government bonds of developed markets, such as US Treasury bonds with a long maturity.

It is expected that the European stock market could experience a 10% decrease in the summer months. This is due to the decrease in economic growth and the worsening of conditions in the debt market, which will likely lead to a decrease in the sale of shares.

Morgan Stanley predicts that the European stock market will soon bounce back from its slump. The MSCI Europe Local Index is projected to reach 1,970 points by the end of 2023, a 5% increase. The MSCI Europe index is expected to rise 8% in the next 12 months.

Goldman Sachs previously forecasted that the stock markets of Japan, Taiwan, and South Korea would continue to expand, and the bank is confident in this prediction.

Japanese stocks are being undervalued by foreign investors, despite the "structural changes" in the country's economy that are providing a benefit. One of these changes is the introduction of a new structure of the Tokyo Stock Exchange, which is designed to increase shareholder returns.