Equity Markets in 2023: Rising Valuations Amidst Earnings Pressure
By
👤Schroders
2023 is shaping up as a robust year for major developed markets, primarily driven by increasing valuations amidst weak earnings. European equities, in particular, have seen almost a 17% uptick in USD terms by the end of April. However, emerging markets (EM) are trailing significantly, with a few exceptions that have performed notably better.
The Dynamics of Big Tech and Corporate Profitability
Once again, big tech takes the lead. Seven US mega-cap companies have collectively yielded a return of 34% this year, while the rest of the US market has risen by only 3%. Corporate profitability, however, is under strain due to escalating costs. Interestingly, upgrades to earnings have begun to outpace downgrades in European equities, although downgrades continue to prevail elsewhere.
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By
👤Schroders
