What does 2022 have for stock markets?

What does 2022 have for stock markets?

2023-02-07 • Updated

2021 was a year of surprises for the stock market, especially in the US. It went against all expectations. Everyone was waiting for the stocks to drop, only to see them make record historical highs over and over, and vice versa.

It won't be much different in 2022. So now let's see what will affect stock movements next year

1. Inflation and rate hike expectations

The markets understood the lesson of higher prices from first sight during 2021. As a result, companies have chosen to pass the higher costs (transportation, materials, labor, and wages) to eager consumers who want to spend what they saved during the pandemic year 2020. As a result, companies earned high profits during 2021, thanks to high inflation.

But the higher prices of goods and services to consumers, the lower the demand, resulting in weaker companies profits. When this happens, the stock markets won't be happy.

If inflationary pressures persist or increase in the first half of 2022, things could become problematic. Stocks are a good hedge against inflation up to a certain degree if it rises between 3% to 5%. However, if price growth continues above 4%, this would undermine profits and hurt stocks.

Also, hotter inflation will push central banks to tighten monetary policy and raise interest rates, thus draining liquidity and withdrawing it from the markets. Federal Reserve Chairman Jerome Powell has already stated that they may raise rates three times during 2022.

However, JPMorgan expects the S&P 500 to jump above 5,000 in the first half of 2022, representing a potential 6% rise from current levels.

2. China and its strict regulatory procedures

Beijing has taken extreme measures to curb the profits of Chinese tech giants and educational companies this year and imposed restrictions on lending to real estate developers to reduce its dependence on the sector.

Offshore Chinese stocks in Hong Kong are among the worst performers in the world in 2021. The MSCI China index is near its lowest level against global stocks since 2006.

Many of the factors that crushed Chinese financial markets will continue with us in 2022. Investors are still afraid of the Communist Party's unexpected policies, with expectations of continued crackdowns on the tech sector, after Beijing asked Didi Global to delist from the New York Stock Exchange in the United States.

In addition, the ongoing trade war, the growing division between Beijing and Washington, and the mutual banning of Chinese and American technology companies by both sides. Finally, let's not forget the Chinese real estate and housing sector crisis.

These obstacles will affect corporate profits and hurt the US and Chinese stocks hard, especially in the tech sector.

3. COVID-19 developments

Pandemic developments have been the main driver of the market for nearly two years, causing the markets to crash in 2020, then launch a historic rally on the back of vaccination campaigns that allowed economies to reopen in 2021.

With the discovery of the Delta and Omicron variants, the markets witnessed chaotic volatility in global stock indices.

Most analysts expect the virus to become a side effect in the coming year as markets and people adjust to living with it.

4. Black Swan events

The year 2022 is full of events that we might call "black swan events," sudden events with unexpected impact on the markets as they are hard to predict.

Among these events: the US midterm elections, the French presidential election, the tensions in Taiwan, the crushing crisis in the Turkish economy after the historic fall of the lira, and the persistence of supply chain bottlenecks.

Global warming and the transition to clean energy are other things that traders may need to consider. In addition, high carbon prices and environmental taxes on companies that produce harmful emissions will increase production costs for industries, which may negatively affect the profits of some companies and stocks.

Finally, do not forget that high valuations of stocks create fragile markets, easily affected by the slightest events. This is what we witness in the stock markets. The value of some shares has become exaggerated and does not reflect their fair value. It's like forming a new bubble, which may explode because of the reasons mentioned above. So, what will happen if more than one reason comes together? Or will the stocks continue to go against the trend?

Similar

Stocks To Watch For March
Stocks To Watch For March

During his program on CNBC on February 28, Jim Cramer expressed frustration with the impact of earnings reports on market behavior, noting how they often prompt rash decisions by average investors. He criticized the short-term focus and lack of attention to nuance in news coverage of earnings. Cramer cited examples of Home Depot and Lowe's, highlighting how investors reacted hastily to headline news without considering the broader context provided in earnings calls.

Jingle Bulls: How Will The Santa Rally Impact Amazon And Apple?
Jingle Bulls: How Will The Santa Rally Impact Amazon And Apple?

As the year winds down and the festive spirit takes hold, the stock market often presents a curious yet anticipated phenomenon known as the Santa Rally. Within this whirlwind of festive trading, let’s look at how two titans of the tech world, Amazon and Apple, might fare during this unique season.

Latest news

USD: Powell Speaks on Cutting Interest Rates
USD: Powell Speaks on Cutting Interest Rates

Jerome H. Powell, the Federal Reserve chair, stated that the central bank can afford to be patient in deciding when to cut interest rates, citing easing inflation and stable economic growth. Powell emphasized the Fed's independence from political influences, particularly relevant as the election season nears. The Fed had raised interest rates to 5.3 ...

WTT: Currency Pairs To Trade In April
WTT: Currency Pairs To Trade In April

Hello again my friends, it’s time for another episode of “What to Trade,” this time, for the month of April. As usual, I present to you some of my most anticipated trade ideas for the month of April, according to my technical analysis style. I therefore encourage you to do your due diligence, as always, and manage your risks appropriately.

Deposit with your local payment systems

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

 1
 93
 355
 213
 1684
 376
 244
 1264
 672
 1268
 54
 374
 297
 61
 43
 994
 1242
 973
 880
 1246
 375
 32
 501
 229
 1441
 975
 591
 387
 267
 55
 246
 673
 359
 226
 257
 855
 237
 1
 238
 1345
 236
 235
 56
 86
 61
 61
 57
 269
 242
 243
 682
 506
 225
 385
 53
 357
 420
 45
 253
 1767
 1809
 593
 20
 503
 240
 291
 372
 251
 500
 298
 679
 358
 33
 594
 689
 241
 220
 995
 49
 233
 350
 30
 299
 1473
 590
 1671
 502
 224
 245
 592
 509
 39
 504
 852
 36
 354
 91
 62
 98
 964
 353
 44
 972
 39
 1876
 81
 962
 7
 254
 686
 850
 82
 965
 996
 856
 371
 961
 266
 231
 218
 423
 370
 352
 853
 389
 261
 265
 60
 960
 223
 356
 692
 596
 222
 230
 262
 52
 691
 373
 377
 976
 382
 1664
 212
 258
 95
 264
 674
 977
 31
 599
 687
 64
 505
 227
 234
 683
 672
 1670
 47
 968
 92
 680
 970
 507
 675
 595
 51
 63
 64
 48
 351
 1787
 974
 262
 40
 7
 250
 590
 290
 1869
 1758
 590
 508
 1784
 685
 378
 239
 966
 221
 381
 248
 232
 65
 421
 386
 677
 252
 27
 500
 34
 94
 249
 597
 268
 46
 41
 963
 886
 992
 255
 66
 670
 228
 690
 676
 1868
 216
 90
 993
 1649
 688
 256
 380
 971
 44
 1
 1
 598
 998
 678
 58
 84
 1284
 1
 681
 2
 967
 260
 263
00:00
00:00
00:00
01:00
02:00
03:00
04:00
05:00
06:00
07:00
08:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00
23:00
23:00
00:00
01:00
02:00
03:00
04:00
05:00
06:00
07:00
08:00
09:00
10:00
11:00
12:00
13:00
14:00
15:00
16:00
17:00
18:00
19:00
20:00
21:00
22:00
23:00

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera