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Most World Stock Markets to End 2008 in Red Reuters LONDON—Global stock markets will not be able to overcome a lethal mix of rising inflation and a spill-out from the global credit crisis this year, with most indexes likely to end 2008 with annual losses, a Reuters poll showed. As a group, strategists have lost faith in the ability of stock markets to achieve anything more than a partial rebound, even though the U.S. Federal Reserve has hacked rates down to 2.0 percent and markets have made a strong comeback from March lows. They fear that soaring oil prices, which made their biggest daily jump ever on Friday surging $11 to a new record above $139 a barrel, along with a steady stream of bank write-downs are likely to see the U.S. market make its first loss for six years in 2008. The quarterly poll of around 120 equity strategists from New York to Tokyo showed only the Toronto and Taipei exchanges posting gains this year. Nine of 13 global indices in the survey saw downgrades made to consensus forecasts taken in March. Pessimism may have deepened further since, because the polls were taken before markets were rocked on Friday by the worst reading for U.S. unemployment in 22 years. World stocks reached a 1-1/2 month low on Monday. U.S. investment bank Lehman Brothers added to the gloom, unveiling forecasts for a huge second quarter loss along with plans to raise $6 billion of new capital to tidy up its books. Its shares tumbled in pre-market trading. "Equities are attractively valued, it's just uncertainty is very high," said Patrick Schowitz at HSBC. "We need to see a turn in the cycle and at the moment the easy call is that we will see some near-term strength with stimulus from the U.S., but after that things are uncertain." U.S. Congress passed a $152 billion economic stimulus this year to help ensure the economy does not slide into recession, but this may not prove anywhere near enough. Strategists agreed that volatility would remain high during the rest of the year. On Friday the Volatility Index jumped some 26.46 percent to close at 23.56, its biggest daily percentage jump since markets fell sharply on March 13.
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