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Quarter-End Insights

Stock Market Outlook: Global Equities Are Starting to Look Attractive

Energy, particularly midstream and refining, is the most attractive sector. Technology has also become compelling.

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Amid political turmoil around the world, the Morningstar Global Markets Index dropped 14% in the fourth quarter to Dec. 20, leaving the broad measure 10% below where it had started 2018. 

From a bottom-up perspective, global equities are beginning to look attractive. The median stock across our 1,500-plus coverage trades at a 14% discount to our estimate of fair value. Entering the fourth quarter, we had pegged the typical stock as fairly valued. Not surprisingly, we also see more strong buying opportunities, with 6% of our coverage trading at 5 stars, up from 2% a few months ago.

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Daniel Rohr does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.