FXStreet reports that Morgan Stanley strategists believe a new cycle has started and a recovery could be more normal than investors expect, therefore, there is room for the S&P 500 to rise 12% through June 2021.

“Morgan Stanley strategists have increased their base-case equity targets across the board with a forecast of 12% upside for the S&P 500 through June 2021, and 10% returns for the MSCI Europe. In Japan, the Topix could decline just 2% over the next 12 months, while the MSCI Emerging Markets index is now forecast to decline by 7% vs. 19% previously.”

“A summer surge in US coronavirus cases, given the unpredictability of the pandemic and the effect on consumer market psychology, the path of coronavirus infections will remain a risk-factor to any outlook.”

“The updated equity returns reflect improvements in target price-to-earnings (P/E) multiples and another six months of a strong earnings recovery. ‘High multiples on trough earnings is fairly common,’ says Wilson, whose team expects earnings to rebound 20% in 2021.”