Updated: Apr 27, 2022
The world has only recently started to recover and ‘live with the virus’ in 2022 following the beginning of COVID-19 in 2019. In this report, I have generalized the different sectors of the stock market into a simple summary of key information. The general projection over the coming months is mainly positive from analysts which shows the economy rebounding from the pandemic. However, following COVID-19 consumer and corporate confidence have been at an all-time low along with more uncertainty amidst the Russia-Ukraine crisis and the new Omicron variant.
First and foremost, The Bank of England has decided to raise the UK interest rate to 0.25% after generously low rates in an effort to boost growth and consumer spending. Now that the economy is growing, so is inflation. Inflation was at 5.1% in 2021 and is expected to continually rise over the coming months.
Both Gases and the Clean energy sector are expected to grow in the coming months. However, the current uncertainty in the Russia-Ukraine war has halted growth. Many EU countries such as the UK and Germany are cutting off their supply from Russia to support Ukraine. This does not come with ease as the EU is heavily dependent on Russia importing over 40% in natural gas leading to a nationwide shortage of petrol in gas stations.
Property is expected to outperform this year as the long-term effects of being forced to
quarantine and stay at home during lockdown have led to the ‘race for space’. The average
UK house price growth increased by over 10.4% last year and shows no signs of stopping in
the coming months.
Companies currently leading the sector such as Pfizer have had huge projected growth due to the search for co-vid vaccines and huge funding for research by the government.
Despite the UK financial regulators releasing a statement discouraging investment in cryptocurrencies, many investors still have high hopes and predictions for them. Companies such as Ethereum have already seen a 31000% increase as of 2016. On the other hand, Bitcoin is expected to tank this year with the value already dropping by 30%.
Metals such as aluminum and iron are expected to underperform this year. The forecast for metals in the coming months of 2022 will likely fall due to high prices which will cut off demand and stoke supply. Furthermore, the current Russia-Ukraine war is ongoing also further decreasing supply.
In 2022, the FTSE index is expected to finish at 8000 which is over a 14% rise. 97 out of a 100 of the FTSE 100 are expected to pay dividends compared to only 85 in 2021 following an increase in confidence and the recovery of the economy after the pandemic. According to analysts, 2022 will be the second-best year for cash returns with 32.7 billion in buybacks and 81.2 billion in forecast dividends.
Top sectors by increases in dividends:
Top sectors by dividend decline:
1. Coca Cola
3. Admiral group
As for the future, Rio Tinto is expected to be the highest dividend-paying stock in 2022. One thing to watch out for is that many companies cut dividend payments when times get tough. Companies such as Shell, Rio Tinto, and Vodafone have all cut their dividend previously.
Below is the FTSE 100 prediction for the top 3 sectors expected to grow in 2022
Forecast by profit increase (pre-tax):
1. Oil and gas
2. Health care
3. Consumer discretionary
Finally, It is important to note that all of these forecasts are merely predictions of what is likely to happen in the following months to come. Similarly to how no one was able to predict the pandemic which plummeted the whole world into a recession, no one can know for certain which stocks will fall or do better in the future.
ONLY FOR EDUCATIONAL PURPOSES, MARKETS ARE SUBJECT TO RISK; CONTACT YOUR FINANCIAL ADVISER BEFORE MAKING MOVES