Expert insights from BlackRock Fundamental Equities – Q2 Stock Market Outlook

Stock Market Monitor

  • Helen Jewell
  • Nigel Bolton

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Key points


How to find opportunities amid volatility

We believe careful selection of companies with strong business fundamentals can offer resilience -- and potential for outperformance of the broad market


Where quality lies across sectors

We see opportunity within the financial, energy, healthcare, consumer and industrial sectors – but knowing what “quality” means in each sector is key


Searching for regional resilience

We see opportunities in Europe and emerging markets, where quality companies may be available at a discount due to relatively low regional valuations

An active approach for resilience and long-term returns

At BlackRock Fundamental Equities, we expect further market turbulence in 2023 as the impact of higher interest rates filters through to economies. For equity markets, we believe this means fewer returns from “beta” – or overall market gains – and a greater share of performance via “alpha” – or above-market returns. Market fluctuations may offer potential opportunities for active, long-term investors to pick up quality companies at a discount. Stock-by-stock research can unearth quality companies across sectors and regions, in our view. This active approach can add resilience to portfolios during economic tumult and offers the chance for long-term returns once economies re-accelerate.

Quality opportunities across sectors and regions

Europe vs. U.S. equity valuations, 1983-2023

Source: Barclays, MSCI, Feb.21, 2023. The chart shows the Cyclically Adjusted Price Earnings (CAPE) ratio for the MSCI U.S. and MSCI Europe Indices, 1983-Jan 31, 2023

How should we define “quality”?

Traditional definitions focus on high profit margins, low debt levels and return on capital. These are all important metrics. But quality can mean different things across different sectors

Financials in focus

We still see potential opportunities in the sector – especially among quality retail banks – and in our view recent events reinforce the need for selectivity

Selectivity is key across sectors

We see opportunities within the energy, consumer, healthcare and technology sectors, but careful research is required to sort the winners from the losers as higher interest rates impact economies.

Why we see opportunities in Europe

Company earnings in Europe have recently held-up better than those of U.S. peers, and European equities remain at a historically large discount to the U.S. See the chart.

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Risk warnings

Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.

Past performance is not a reliable indicator of current or future results and should not be the sole factor of consideration when selecting a product or strategy.

Changes in the rates of exchange between currencies may cause the value of investments to diminish or increase. Fluctuation may be particularly marked in the case of a higher volatility fund and the value of an investment may fall suddenly and substantially. Levels and basis of taxation may change from time to time.

Important information

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For investors in Switzerland: This document is marketing material.

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Any research in this document has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. The views expressed do not constitute investment or any other advice and are subject to change. They do not necessarily reflect the views of any company in the BlackRock Group or any part thereof and no assurances are made as to their accuracy.

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