Forecast for the stock markets 2023: Restrictive monetary environment and negative economic outlook

Forecast for the stock markets 2023: Restrictive monetary environment and negative economic outlook

According to a report by www.ideas-magazin.de, the stock markets regularly show strong seasonal dynamics in the fourth quarter of a year. For 2023, however, it is expected that the current restrictive monetary environment with high money market returns will have an impact on the stock markets. Nevertheless, no sharp price setbacks are likely initially as long as corporate profits continue to develop robustly.

The experts currently classify the economic environment for the European stock market as “negative”. This is primarily due to the continued weak monetary development. The M1 money supply in the euro area has continued to weaken over the last three months and the signal of an inverted interest rate structure also persists. The yield on 2-year German government bonds is currently higher than the yield on the 10-year federal bond, which is interpreted as a warning signal for the market.

These developments could have an impact on the stock market and the financial industry. An increase in ECB key interest rates by a total of 450 basis points is expected to slow the economy and corporate profits. Geopolitical risks, such as the Hamas attack on Israel, must now also be taken into account in investment decisions.

Overall, these factors can lead to uncertainty and volatility in the stock markets. Investors should keep a close eye on the development of monetary indicators and geopolitical risks in order to adapt their investment strategies accordingly.