Danske Bank remains positive on equities and assesses that a resilient economy and strong earnings growth are providing support for stock markets. The bank highlights that MSCI World has risen by around 20 percent over the past year, while earnings estimates have been raised even more, meaning that global equities are approximately 15 percent cheaper than a year ago in terms of valuation.
The bank points in particular to the technology sector, where earnings forecasts for 2026 have been raised by around 45 percent since the start of the year. For global equities, earnings growth is expected to amount to approximately 35 percent in 2026.
Danske BAnk meanwhile sees persistent inflation and further increases in long-term yields as the biggest risk to the stock market. The bank also assesses that a Democratic takeover of the House of Representatives in the US midterm elections could limit new unfunded stimulus measures and thereby reduce upward pressure on long-term yields.
The focus in the near term is on this week’s US macroeconomic data, above all core PCE and Friday’s jobs report. Danske assesses that a moderately weaker jobs figure would likely be more favorable for the stock market, while strong data could increase inflation concerns and push yields higher.
