Extracting Growth Expectations from Financial Markets: An Investigation into the Dividend Market Dynamics

Abstract: Dividend futures, reflecting the economic surplus, can be used as a forecasting tool for dividend and GDP growth. Building on prior research, I broaden the scope of analysis by encompassing a range of countries and evaluate the impact of shocks such as a military conflict on dividend and GDP growth expectations. Notably, after the Russian invasion of Ukraine, dividend growth and GDP expectations declined more sharply in the Euro area and Italy than in the United Kingdom and Switzerland. The findings underscore the value of dividend futures as a tool for policymakers and market participants to obtain forward-looking insights into the anticipated economic trajectory during times of uncertainty and crisis.