2023 likely to be a year of stop-start trade dominated by earnings shortfalls and China driven inflation

A lack of any sparkle to earnings, into 2023, may mean a dose of reality will kick in for investors. IGTV caught up with the FT’s ‘Adventurous Investor’ columnist, and director of Doceo, David Stevenson. He says, while central banks may get on top of inflation when China recovers from its Covid driven downturn, that may spur more inflation. Stevenson says oil may move back up above $100, which could help the FTSE100, but will add to higher prices. In terms of earnings he says long term the S&P500 works to a price to earnings ratio of 17, it’s currently above 20, so that will have to come down. One final area he calls out for possible attention is biotech. After a disastrous 2022 he’s suggesting that this may now be now hitting trough, but it may be a bumpy rise out of the downturn.

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