Earnings growth expectations have improved since the start of the year and the Russell Investment Canada team now expects 14%, compared to 10% at the beginning of the year (based on Refinitiv DataStream).
“Market valuation has improved; However, the profit margin spread is well above the long-term average. It will be a challenge to maintain high profit margins with rising costing costs, and hence, we consider the price to be slightly negative,” Kshatriya said.
Like Canada, global growth for 2022 is expected to be marginally up-trend.
The team believes that equities will outperform bonds and cash amid constant volatility in the market due to the significant uncertainty created by the conflict.
“Markets had a lot of concerns prior to the attack, including the beginning of the US Federal Reserve’s (Fed) tightening, the impact of the COVID-19 lockdown on supply chains and inflation, and the outlook for China,” said Andrew Pease, global head of the economy. Investing Strategy at Russell Investments. “We expected global growth from a post-lockdown boom in 2021, but remained above trend in 2022. The consequences of the invasion are lower global growth, the biggest hit in Europe, coupled with higher inflation.”