Poll: Will Equity Markets Be Driven More by Macroeconomic or Company-Specific News in the Next Year?

In a poll conducted earlier this week in the CFA Institute Financial NewsBrief, we asked readers whether they think equity markets will be driven more by macroeconomic or company-specific news over the next 12 months.

In the next 12 months, do you expect global equity markets to be driven more by macroeconomic news (e.g., GDP growth rate, monetary policy, fiscal policy) or company-specific news (e.g., revenues, earnings, mergers)?

Since the onset of the 2008 financial crisis, the markets have been driven by global macro events, particularly in the form of government support and stimulus. These events include the massive monetary stimulus from the US Federal Reserve, large-scale asset purchases by the European Central Bank, and the introduction of Abenomics in Japan just seven months ago.

On 26 June 2013, the Bureau of Economic Analysis revised US GDP for 1Q2013 downward from 2.4% to 1.8%. Combined with the Fed's recent talk of removing monetary stimulus from the markets (by tapering its $85 billion per month purchases of bonds), we thought it would be a good time to ask investors whether they thought the economy was strong enough to grow on its own. If so, perhaps the markets could focus more on such microeconomic (company-specific) events as earnings, product development and acquisitions. If the economy is not strong enough, the removal of stimulus might send the economy back down again.

Of the 926 respondents, 86% expect the markets to continue to be driven by macroeconomic events during the next 12 months, with less than 14% of respondents expecting micro events to drive the markets. According to the poll results, any shift in focus toward microeconomic events would be a big surprise.

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