JP Morgan AM: Rising valuations are driving equity returns

JP Morgan AM: Rising valuations are driving equity returns

April 22, 2024

Equity
Koersgrafiek (05) koers pijl omhoog stijging

Over the six months to the end of March, developed market equities have returned 21% on a total return basis. Across regions, expanding valuations are behind a large share of these gains.

In Europe, for example, earnings expectations have not increased over the past six months, with higher valuations the overwhelming driver of recent returns. While earnings forecasts in the US have risen somewhat, multiple expansion has also provided the majority of equity market gains.

Rising valuations may reflect more positive sentiment about the economic outlook, as growth remains resilient in the US and shows signs of rebounding in Europe. Nonetheless, firms will need to deliver in the Q1 earnings season to justify - or perhaps grow into - current valuations.

22042024 JP Morgan AM

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