S&P 500 Index still have much further to rise for three reasons – Natixis

Equity market indices have already risen considerably, particularly in the United States. But economists at Natixis believe that despite this rise, equity markets have significant additional upside potential. 

See: S&P 500 Index to climb towards 4100 by end-2021 – Deutsche Bank

Key quotes 

“Growth is already vigorous in Asia. As the public health constraints are gradually lifted, it is likely to be vigorous in the United States and Europe from the second half of 2021. Growth is boosted by expansionary fiscal policies and the recovery in global trade.”

“Real long-term interest rates are negative and will remain so given the high level of global savings and the continuation of expansionary monetary policies, which the Federal Reserve and the ECB have confirmed. As long as long-term interest rates remain clearly lower than nominal potential growth (which is around 4.5% in the US and 3.5% in the eurozone), the discounted sum of future dividends is infinite and equities’ fundamental value does not limit their rise.”

“Sectors that are currently in difficulty (hospitality, tourism, air transport, aerospace, traditional retail, automotive) will recover once the public health constraints are eased (from the summer of 2021?). This means that equity market indices for these struggling sectors will also recover.”