More than two-thirds of investors are anticipating a stock market pullback before the end of the year, research suggests, amid concerns over growth prospects and the Covid-19 Delta variant.
According to a poll of over 550 global investors by Deutsche Bank, an equity correction sometime before the end of the year is “an overwhelming consensus now”, with 58% forecasting a drop of 5% to 10%.
One in 10 expect a steeper tumble, while just less than a third predict markets will avoid stumbling in the next few months.
The possibility of new Covid-19 variants that bypass vaccines pose the biggest risk to market stability, closely followed by higher than expected inflation, the survey found.
Investors also warned that weaker-than-expected economic growth was a potential risk, along with the danger of a central bank policy error, in which rising prices prompt monetary policy to be tightened too early.
Source: Deutsche Bank 2021
Global share prices have risen by about 90% since the depths of the market crash in March 2020, lifted by central bank stimulus packages, government spending and successful vaccine rollouts that have allowed economies to reopen.
The S&P 500 index of US shares and the Europe-wide Stoxx 600 have hit a series of record highs this year, with both gaining about 18% during 2021 – much more than an average year.
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