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Market Outlook: July – December 2022

There’s no denying that 2022 has brought posed some of the greatest challenges for investors in years, from the geopolitical instability caused by the war in Ukraine, to soaring inflation and a cost-of-living crisis. 

The first half of 2022 was challenging for markets

2022 has so far already seen the worst bond market performance since 1980, significant moves between equity indices, and, since 1960 when data collection commenced, the largest commodity outperformance.

In fact, the economics team at Morgan Stanley have described the current situation as “the most chaotic, hard-to-predict macroeconomic time in decades.”

A Washington Post article recently reported the stock market closed the first half of the year to June 30 with its worst six-month performance since 1970.

The S&P 500 index closed out the first half of 2022 with losses to 20.6 percent, while the Nasdaq fell almost 30%, and the Dow Jones almost 15%. Apple, Microsoft and Alphabet’s values have all fallen by almost a quarter in 2022 and Amazon has fallen more than 37%.

In Europe, the market is trading at 21% below its 10-year median.

We can expect better to come

So, what can we expect for the remainder of 2022?

In Europe, some analysts expect earnings to grow 14% as a result of increasing commodity profits.

The Summer 2022 Economic Forecast from the European Commission, published on 14 July, sees the EU economy to continue expanding, albeit at a slower pace than might have been expected. It cites the impact of Russia’s war on Ukraine and China’s zero-Covid policy as being among the factors responsible.

It does however expect greater traction in 2023, when inflation is also expected to begin to ease.

Markets historically do bounce back

There is good reason to be confident of a market bounce back, with history showing us that markets do go through peaks and troughs, but do eventually bounce back, rewarding investors who held firm to their financial plan.

That’s why it is important to take a steady, long-term approach to your investment strategy. Doing otherwise has the potential to undermine any benefit you would have realised in the future.

Staying invested for the duration is critical to coming out the other side of economic challenges. Having a strong financial plan provides you with the confidence that your investments have been placed strategically and in alignment with your financial and lifestyle goals.

If you are thinking of investing, or have ay questions about your current investment strategy, please get in touch with the team at Hennelly Finance.

We know how important it is to you that your investment goals and achieved, and we can provide you with advice to help you ride out the uncertainty and keep your strategy on track.

 

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