Deutsche Bank strategist feels ‘lonely’ on stock rally

Bloomberg

The year ahead will be better for European stocks than many think as inflation peaks and rates normalise, according to a Deutsche Bank AG strategist.
“Although earnings are likely to fall in 2023, fewer macro risks and lower rate volatility should be supportive for equity markets,” Maximilian Uleer wrote in a cross-asset outlook note. Consensus is “overly pessimistic for 2023, we seem to be lonely bulls.”
Uleer forecasts the Stoxx 600 Index will end the year at 495 points, about 14% above January 3’s closing level.
European stocks just had their worst year since 2018, but still did better than US peers as cheaper valuations provided support. The outperformance is extending into the start of 2023, with the Stoxx 600 advancing in the first three trading days of the year.
Strategists on average expect only a mild rebound in the region’s equities in 2023.
The Stoxx 600 is likely to climb to 449 points by the end of the year, according to the average response to a Bloomberg survey published last month, implying upside of about 3%. A separate informal survey of 134 global fund managers conducted by Bloomberg News showed some of the world’s biggest investors predict stocks will see low double-digit gains.