All articles tagged with #equity rally
Global investors are increasingly returning to China, driven by a strong stock rally, technological advancements, and improved fundamentals, reversing years of aversion amid regulatory crackdowns and economic crises, with inflows across equities and bonds supporting the yuan and boosting confidence in China's market prospects.
Bank of America strategist Michael Hartnett warns that the current global equity market rally is nearing a sell signal, with 71% of equity indexes trading above their 50- and 200-day moving averages. A reading above 88% would trigger a contrarian sell signal, indicating potential overheating.
Citigroup's equity strategists anticipate a shift in the US equity rally towards more defensive market segments influenced by interest rates, leading to a downgrade of the technology sector to market-weight due to mixed prospects within its subsectors. The consumer discretionary sector is elevated to Overweight, while financials are adjusted to Market Weight with a balanced view. Citigroup's analysis also raises concerns about the sustainability of the current market rally, as its flagship indicator signals "euphoria" levels.
Asia-Pacific markets, including Japan's Nikkei 225, rose ahead of U.S. inflation data, with the Nikkei briefly crossing the 35,000 mark for the first time since 1990. Investors are also awaiting the Bank of Korea's rate decision, while in the U.S., all three major indexes gained as traders anticipate the release of fresh inflation data and earnings. Additionally, analysts are discussing the performance of electric vehicle companies like Tesla and BYD, as well as offering insights on the equity market's outlook for 2024.
According to Bank of America's global fund manager survey, investors expect a soft landing for the economy, with a majority believing that the Federal Reserve hiking cycle is over and expecting lower bond yields. Despite concerns about fiscal policy being too stimulative, investors have reduced cash levels and increased bond overweight. The survey also highlights a contrarian play for 2024, "long leverage, short quality," which implies a bullish bet on companies that need to borrow and a bearish bet on companies with healthy balance sheets. Stock futures and bond yields are flat ahead of CPI data.
A Wells Fargo strategist has warned investors not to chase the current equity rally ahead of the Federal Reserve meeting. The strategist noted that the market is already pricing in a lot of good news, and any negative surprises from the Fed could lead to a sharp sell-off.