Global economic slowdown and political uncertainties are rattling markets across the world. Which way will some of the world’s major indexes and currencies move in the coming quarters and years? Here’s what analysts are predicting for Japan’s Nikkei 225, Germany’s DAX and Britain’s FTSE 100 and associated currencies.
A rough ride for Japan’s Nikkei 225 Stock Market Index forecast
Japan’s Nikkei 225 Stock Market Index is forecast to trade at 16600 by the end of 4Q2016. Over the coming 12 months, Nikkei index is expected to average 16100. In 1Q2017, Nikkei 225 is projected to average 16400, cooling to 16200 by the end of 2Q2017 and then cooling further to 16100 by the end of 3Q2017. The long-term outlook shows that Nikkei 225 index will average 13400 in 2020.
In the currency market, USD/JPY is forecast to average 103 in 4Q2016, rising to 104 in 1Q2017. The U.S. currency is expected to steadily gain ground against its Japanese counterpart in the coming years. Therefore, USDJPY is modelled to average 105 in 2Q2017 and then advancing to 106 in 3Q2017. In 2020 the currency pair is forecast to average 123.
Amid economic slowdown, the Bank of Japan has cut lending rates and stepped up money supply through bond purchases to try to jumpstart economic growth. But the impact of the easing measures has so far had little impact on the yen, posing a headache for Japanese monetary regulators.
Brexit aftershocks see rattling Germany’s DAX Stock Market Index
Germany’s DAX stock market index is projected to ease in the coming quarters and years. The index is forecast to trade at 10400 by the end of 4Q2016. Over the coming 12 months, DAX is expected to average 10100. DAX will continue to pull back in 2017, shrinking to 10300 in 1Q2017 and easing to 10200 in 2Q2017. By the end of 2020, DAX is forecast to average 8410.
In the currency market, EURUSD is modelled to average 1.11 in 4Q2016. But the currency pair is expected to be volatile in the coming quarters, hitting 1.1 in 1Q2017, 1.09 in 2Q2017 and 1.08 in 3Q2017. EURUSD is forecast to average 0.09 in 2020.
The U.K’s FTSE 100 to enter a downward spiral
The U.K’s FTSE 100 Stock Market Index is forecast to trade at 6719in October, suggesting a pullback of 3.96% from the previous month. The index is further expected to rise to a maximum of 7122 in October and sink to a low of 6228 in the month.
In 4Q2016, FTSE 100 is projected to average 6910 and the average in the next 12 months is forecast at 6700. By the end of 1Q2017, the index is expected to trade at 6840, easing to 6770 by the end of 2Q2017 and easing further to 6700 by the end of 3Q2017.
In 2020, FTSE 100 is modelled to average 5590, suggesting a slowdown is looming in the next four years.
Turning to the forex market, GBPUSD is expected to average 1.27 in 4Q2016, retreating to 1.25 in 1Q2017 and pulling back further to 1.24 in 2Q2017. By the end of 3Q2017, GBPUSD is expected to trade at 1.23, but the pound is seen losing ground in the coming few years to average 1.02 in 2020.
Volatility in the Eurozone
The Eurozone had already been battling economic slowdown that had weakened the Euro even before the stunning outcome of the Brexit vote. Economic uncertainty is expected to persist in the Eurozone, rattling the stock and currency markets now that Britain has said that it intends to launch the formal process of peeling off from the European Union early next year.
All said, it goes without saying that unlike the usually more uncertain IPO trading, indexes are much more predictable.