Financial markets picked up on violence and chaos on Capitol Hill, with both the Dow DJIA
and S&P 500 SPX,
reached new highs on Wednesday and the Nikkei 225 set another 30-year record on Thursday.
However, investors’ optimism could be tempered if we continue in 2021, as Citi’s global strategic team said world stocks will be flat over the course of the year. call of the day.
The investment bank’s strategies predicted only a 2% increase in the benchmark MSCI All Countries World Index 892400,
over 2021, and neutralize their propensity for growth sectors in favor of a conversion into value stocks.
The lowering of the temperature on their long-standing bias against growth stocks, which has historically kept their appreciation of the U.S. market overweight, is part of the reason for downgrading the U.S. market to neutral.
They also saw the US fiscal deficit as a threat to the dollar, which is expected to weaken this year, boosting emerging markets and commodity stocks.
But bond yields could be boosted, helped by a recovery in the global economy, with Citi predicting a 10-year US Treasury yield (currently at 1%) in the coming months of 1.25% and by the end of year will achieve 1.45%. They said it should help financial and energy companies, which are valuable stocks.
The best returns are expected in the UK, where Citi predicts 7% growth for the FTSE 100 UKX,
and Australia, where they expect the S & P / ASX 200 XJO,
to rise 6%. Emerging markets, especially China, Korea and Russia, are being singled out by the strategists for growth.
Their “slightly optimistic” view on global equities depends on the success of COVID-19 vaccines in launching the global economy. Citi’s economists predict a 5% increase in global gross domestic product in 2021, after 2020’s contraction of 3.9%.
Both of these factors should promote the recovery of corporate profits, with earnings per share in the most battered sectors.
Citi strategists said many of their recovery forecasts could already be priced in the market, as the MSCI All Countries World Index traded at 20 times its consensus earnings per share – much higher than the long-term median of 15 times. By benchmark, the US is the most expensive of the major markets and the UK the cheapest.
In terms of sentiment, Citi said we are deep in the euphoria area in the US Panic / Euphoria Index, suggesting that corrections are possible. Their proposal? Buy the dip.
The buzz
President Donald Trump acknowledged the defeat in the US presidential election and said there would be an “orderly transition” of power. His concession came after Congress ratified the victory of Joe Biden and Kamala Harris and voted until nightfall after a violent pro-Trump gang stormed Capitol Hill on Wednesday.
Also: Why the stock market rose even when a violent crowd stormed the Capitol
Technology giant Facebook FB,
and Twitter TWTR,
took steps to limit Trump’s ability to communicate with supporters during the siege of Capitol Hill, temporarily closing his accounts amid the violence that claimed four lives.
Plus: World leaders Boris Johnson, Justin Trudeau and others condemn ‘shocking’ and ‘shameful scenes’ at US Capitol
According to CBS, senior members of the Trump administration have discussed the possibility of appealing to the 25th Amendment to the Constitution. Calling him for the first time in history would remove Trump as president and make Vice President Mike Pence the commander-in-chief.
Read more: Re-accusation? 25th amendment? Several ideas have driven to end the Trump era now
U.S. officials are considering banning Americans from investing in Alibaba and Tencent, China’s two most valuable listed companies. This would extend an extension of the Trump administration’s effort to blacklist investments in Chinese companies related to the country’s military.
Sports betting such as DraftKings DKNG,
Caesars CZR,
and MGM Resorts MGM,
traded late Wednesday, after New York Governor Andrew Cuomo changed his mind about legalizing the practice. Cuomo said New York has the potential to be the ‘largest sports betting market in the United States’.
The markets
Stock market futures contract YM00,
ES00,
points slightly, is set for a soft but positive opening to continue the record highs reached Wednesday’s rally. Asian markets NIK,
HSI,
SHCOMP,
tapped while European equities SXXP,
UKX,
DAX,
PX1,
trade just above flat.
The market responds positively to the Democratic battle waged by the two Senate run-off victories in Georgia, which improves the chances of more fiscal stimulus, as elected Vice President Harris will cast a groundbreaking vote.
Read more: Democrats win Georgia’s by-elections, giving their party control of the US Senate
The graph
U.S. Treasury yields, shown in our graph of Marshall Gittler’s day at BDSwiss, rose sharply when the two Senate run-off races in Georgia were asked for Democrats. Returns for ten years TMUBMUSD10Y,
rose 8 basis points to 1.04% – the first time since mid-March 2020 it has been higher than 1%.
The tweet
Research by YouGov found that one in five voters approve of the Capitol Hill storm, and that a majority of Republicans blame President-elect Biden for it.
Random reading
New bar does roar trade during lockdown after opening in a nursing home.
On the lamb: ‘Very cold’ llama found wandering off the highway in Massachusetts.
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