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SEB: It looks like a stock market correction is in the cards

The major bank keeps underweighting equities as the stock market appears to be overly optimistic causing valuations to be "challengingly high".

Photo: CHRIS HELGREN/REUTERS / X00378

In the near term, the stock market appears to be overly optimistic. Sentiment has shifted from pessimistic to highly optimistic in the course of a few months, writes SEB in its new Investment Outlook.

Consequently, a stock market correction is in the cards, the major banks writes, adding that a better economy has largely been priced in, which limits upside stock market potential in the near term. Thus, SEB recommends a smaller proportion of equities than its long-term average.

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