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Despite concerns, 47% of traders expect a ‘short and mild’ global recession in 2023
LONDON, UNITED KINGDOM, 09 Jan 2023 – According to a survey run by Capital.com, the high-growth global trading platform, 63% of its retail traders expect global markets to go into recession in 2023. When asked how severe they expect the recession to be in 2023, 40% of respondents said global markets would experience a multi-year recession while 47% expect it to be short and mild. Interestingly, 25% of traders did not expect global markets to be in recession this year while 12% remained unsure of the outlook.
The findings, which were revealed as part of a survey of 4,093 Capital.com clients polled globally, suggest that retail traders are perhaps cautiously optimistic about global markets in the year ahead. The survey was carried out between July and August of 2022.
Daniela Hathorn, Market Analyst at Capital.com, said: “We know that markets are usually one-step ahead of the economy and while there continues to be concerns about a recession, traders are perhaps starting to think that the worst-case scenario may have been avoided, which was partly reflected in the stock market recovery in Q4. However, looking ahead, recession concerns will likely persist even as central banks around the world press pause on further rate hikes. Supply disruptions, labour-market pressures and ongoing geopolitical risks will likely keep recession risks elevated in 2023.”
The survey also revealed how retail traders would be positioning their portfolios in the next 6 to 12 months with a close split between those who said they would not change their strategy (31%) and those who said they would take on more short positions (23%). Conversely, 21% of those polled said they would move into cash savings and investments while 16% opted for more exposure to gold in 2023.
“It’s interesting to note how more traders are looking at shorting strategies as markets turn more uncertain. Contracts for Difference (CFD) trading enables traders to take a short position in many markets, meaning they are able to position themselves accordingly even when their views are more pessimistic or they believe an asset is overpriced. That said, as always, traders should be cautious when placing leveraged positions and should implement appropriate risk management into their strategies, like the use of stop losses,” noted Hathorn.
UK retail traders optimistic on gold and other commodities
When asked which markets they thought would perform well over the next six to 12 months, more than 70% of Capital.com’s UK-based traders polled said commodity markets would perform well, of which 43% thought that gold markets would be the best performing commodity market in the year ahead.
UK traders were less optimistic about other asset classes with just 16% of those polled in the UK expecting stocks to be strong performers this year. Expectations for outperformance across forex markets was supported by only 10% of respondents.
“The main theme across commodity markets in 2022 was the outperformance of the energy sector while precious metals like gold and silver were underwhelming. Looking ahead to this year, the possible end of central bank tightening and the shift from inflation concerns to recession concerns should favour bullion while the dollar continues to weaken. Our survey findings seem to reflect this trajectory with more than 43% of traders in the UK expecting gold markets to perform well over the next six to 12 months,” added Hathorn.