Q3 equity market outlook
Five charts on the key equity market drivers
Key highlights
Key highlights
- Global equity markets are defying key leading economic indicators
- One year forward P/E expansion has driven the S&P 500 higher, despite analysts cutting earnings forecasts
- A narrow market, supported by artificial intelligence has driven US equity market performance year-to-date
- Individual investor sentiment surveys suggest that investors have become more bullish
Central banks’ efforts to contain inflation are backward-looking and are reigniting fears of a recession
Central banks’ efforts to contain inflation are backward-looking and are reigniting fears of a recession
Manufacturing Purchasing Manager’s Index (PMI)
![Line chart showing Manufacturing Purchasing Manager’s Index (IPM). The line chart shows two lines: Global and Eurozone.](/co/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q3-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid_copy_31/col1/textimage/image.580.png/1698402522260.png)
Equity valuations move higher despite weaking leading indicators
Equity valuations move higher despite weaking leading indicators
Stoxx Europe 600 & S&P 500 P/E NTM
![Line chart showing equity valuation through STOXX Europe 600 and S&P 500 price-to-earnings next twelve months ratio.](/co/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q3-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid_copy_31/col1/textimage_copy/image.580.png/1698402522366.png)
Analysts continue to cut earnings for US stocks
Analysts continue to cut earnings for US stocks
S&P 500 2023e EPS
![Line chart showing earnings per share for companies within the S&P500 from June 2021 to June 2023.](/co/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q3-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid_copy_31/col1/textimage_1405692454/image.580.png/1698402522466.png)
AI stocks drive equity markets higher
AI stocks drive equity markets higher
Price index (rebased to beginning of 2023)
![A line chart showing price index (rebased to beginning of 2023) of the S&P500 and the S&P500 excluding AI(artificial intelligence) stocks.](/co/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q3-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid_copy_31/col1/textimage_1405692454_87492930/image.580.png/1698402522567.png)
Investors have become more bullish
Investors have become more bullish
AAII investor sentiment survey – Bull
![Line charts showing the results of the American Association of Individual Investors survey of investor sentiment towards the stock market, showing bullish](/co/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q3-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid/col1/textimage_1405692454/image.580.png/1698402522703.png)
AAII investor sentiment survey – Bear
![Line charts showing the results of the American Association of Individual Investors survey of investor sentiment towards the stock market, showing bearish](/co/en/assetmanagement/insights/asset-class-perspectives/equities/articles/q3-2023-equity-market-outlook/_jcr_content/mainpar/toplevelgrid/col2/textimage_1405692454/image.580.png/1698402522771.png)
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