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LONDON (Reuters) - Stock market strategists are sticking to their positive view on the performance of global equity markets, expecting solid gains in even the most beaten-down indexes in India and Japan, according to the latest quarterly Reuters polls.
The United States under President Donald Trump threatening to impose tariffs on its traditional allies and appearing to take Russia's side in the three-year war with Ukraine does not appear to have shaken their resolve.
Slightly more than half of the strategists - 48 of 86 - at banks and brokerages polled by Reuters on February 13-25 expected a correction in their local market in the coming three months, roughly the same proportion compared with a November survey, suggesting the overall risk outlook has not changed much.
"There is an inherent paradox between this very high level of uncertainty we have on a number of metrics and the fact stock markets seem to be still doing well," said Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management.
"Large broad-based tariffs are not priced in. The first reason is obviously the market assumption Trump is using those tariffs as first and foremost a negotiation tool, a leverage to extract concession from countries. The other is despite all his threats, we have not yet seen any actual implementation of tariffs."
About 60% of strategists - 50 of 84 - covering 15 major equity indexes, said corporate earnings would grow slower in their local markets in 2025 than last year on rising political and economic risks. They still forecast solid gains for the rest of the year.
Prospects for widespread deregulation and tax cuts in the U.S. have strategists still expecting the Standard & Poor's 500 index to gain more than 10% this year, on the heels of the more than 50% racked up over the past two alone.
Those predictions come even as bond markets have started showing signs of concern about a U.S. economic slowdown before Trump's tariffs - he has proposed some of the most hefty levies since the 1930s Great Depression - take effect.
The price of safe-haven gold has also repeatedly hit record highs, usually a sign of investor caution.
Inflation worries have kept the Federal Reserve on pause with interest rates although futures markets expect two more cuts this year, and several more from the European Central Bank, grappling with a weaker economy.
Yet shares on Europe's top bourses, such as Germany's DAX, and shares listed on Hong Kong's Hang Seng index have been the runaway winners so far this year, with more than double-digit gains, a clear break from the trend before the U.S. presidential election in November.