The S&P/ASX 200 Index (ASX: XJO) is soaring on Friday, up 1.8% in early afternoon trade to 6,760 points.
The strong run higher on the ASX 200 today follows in the footsteps of the US market. The S&P 500 Index (SP: .INX) finished yesterday (overnight Aussie time) up 2.6%.
This came despite a hot US September inflation print, as bearishly positioned options traders, caught on the wrong side of the trend, scrambled to cover their short positions.
That's today's price action.
So, what can ASX 200 investors expect by the end of 2022?
Here's where UBS says the ASX 200 will finish the year
Despite today's sizeable gains, the ASX 200 remains down 10.9% so far in 2022.
But in potentially good news for investors, broker UBS believes the worst of the sell-off is over. UBS analysts believe the benchmark index will end the year higher from here, with an Aussie recession looking unlikely.
According to UBS equity strategist, Richard Schellbach (quoted by The Australian):
Domestic cyclicals have been notable underperformers, with sectors exposed to the local consumer or housing down about 30% year to date. Given we do not expect a recession to play out in Australia, these moves seem overly pessimistic, and present an opportunity to buy into some high quality businesses with solid medium-term prospects.
Schellbach pointed to strong demand for the products produced by ASX 200 and smaller listed companies as likely to support the market in the months ahead.
"Despite gloomy press headlines, and continued challenges from supply chain constraints, input cost pressures, and more recently labour market shortages, the reality is that the end-demand which ASX business are seeing is firm," he said.
UBS has a year-end target of 7,000 points for the ASX 200. That implies a lift of 3.5% from the current level.
Of course, not all stocks are created equal. Should the benchmark gain 3.5% by the end of 2022, some shares will see a much larger lift while some will see their share prices slide.
Happy investing!
