Following are some of the genuine expectations from the market of 2018.
The global economy will remain healthy
As we know that in this year, the global economy was a rising tide that lifted most risk assets with global equities on pace to return 20-plus percent in 2017. So it is expected that the trend will continue heading into 2018. Only some handful countries, like Venezuela, are expected to stay in recession. As per the experts, this uptick in economic activity is expected to raise the global growth from 3.2% in 2017 to 3.4% in 2018.
Some technical analysts think that synchronized growth among developed. And emerging economies has led to a healthy rise in global corporate profits. Through global EPS rising by about 16% in 2017, a full repeat seems unlikely next year due to tougher year-on-year comparisons. It is expected by the experts that the global EPS could still rise by an additional 10% next year.
The U.S. tax bill will likely become law, boosting S&P 500 earnings
The U.S. tax bill is now in the hands of lead negotiators finalizing the details in the conference. It was passed by both the House and the Senate. There is a very high chance that the bill will ultimately be signed into law soon. But according to a report, many details are still up in the air. With the two separate bills currently split on when the cuts take effect, most notably. Negotiators must determine whether the corporate tax cut will occur in 2018, or be delayed until 2019. Analysts believe that there is some potential that agreement on a few of these final details could disappoint observers and weigh on market sentiment.
Employment and price stability will support U.S. growth
If you have a glance of 2017, since December 2000, 2017 is the year, when the Federal Reserve achieved its “full employment” mandate with the unemployment rate at just 4.1%, the lowest level. But it remains to be seen whether the Federal Reserve can also achieve its second mandate of “price stability” in the year 2018. The rate remains below the Fed’s desired target of 2.0%, with inflation up just 1.6% year-on-year. At the same time as the Federal Reserve is projecting three additional rate hikes next year. It will largely be dependent on whether the inflation rate meets expectations. When the inflation falls short of the Fed’s stated goals, it might be possible that the hikes will occur at a slower pace than projected. In both the ways, the financial sector looks poised to eventually benefit from higher rates and less strict regulation.