PremiumFor global fund managers, Covid concerns are now a thing of the past. The latest survey by BofA Securities showed that 35% of respondents see inflation as the biggest tail risk to their portfolios. This is despite the US Federal Reserve's assurance that the recent surge in prices as temporary in nature.
A record of 69% those surveyed see a scenario of high growth and high inflation going ahead.
Premium Premium 
Premium Premium Even though global investors are unnerved by the latest inflation data, market experts are of the view that the ongoing stock market rally is unlikely to reverse only due to inflation. They feel, the accommodative stance of global central banks will continue to lend support to the equity market sentiment.
Liz Ann Sonders, senior vice president and chief investment strategist at Charles Schwab & Co points out that there are short-term forces pushing inflation higher which include base effects of last year.
Also, the pandemic has also brought about supply-side constraints; both on the goods and services side of the economy. She feels these factors are mostly likely to have a short-term impact on prices. "Over the past few decades, inflation has not (obviously) been a hindrance to the stock market as it’s been “pro-cyclical" in nature," she added.
According to Ed Yardeni of Yardeni Research, Inc., the strong economic recovery will not get interrupted by inflation or credit crunch and the S&P500 will soon reach 4,500. He further added that not only will the bull market in stocks continue with strong profits, but the bond yield will go to 2% by year end and 2.5-3% next year.
Interestingly, in spite of inflation fears, 78% of BofA's survey respondents expect global profits to improve over the next 12 months, down 6 percentage points compared to the previous month, but still near all-time highs.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!
