It’s the right time to buy global equities after a pullback that brought them to the brink of a correction, according to Citigroup Inc. strategists.
The team led by Beata Manthey said they forecast a 15% advance in the MSCI All-Country World Local Index by mid-2024 given “more balanced macroeconomic risks.” The strategists favor sectors exposed to the economic cycle, so-called cyclical stocks, as they expect a peak in interest rates, a mild slowdown in growth and a gradual cooling in inflation.
“Until recently, our year-end targets implied down markets and increased volatility,” Manthey wrote in a note. “After the last selloff, we see a more attractive entry point. We would buy dips, as advised by our Bear Market Checklist.” That Citi tool measures metrics such as stock valuations, the yield curve, investor sentiment and profitability.
A surge in U.S. bond yields has shaken financial markets in the past few weeks as investors worry central banks will remain hawkish for longer. The MSCI all-country index deepened its slump from a peak reached on July 31 to as much as 9% this week, coming close to the 10% threshold of a technical correction, before trimming some of the declines.
US technology shares have been hit particularly badly by the jump in yields, as higher rates impose a bigger discount on the present value of future profits, hurting growth stocks with the frothiest valuations. Manthey said that although she does expect rates to remain elevated for longer, growth stocks are now at oversold levels. The strategist raised her rating on global technology stocks to overweight.
Early in February, Manthey correctly predicted that the outperformance of European stocks over their U.S. peers had more room to run due to lower valuations and subdued fund flows. She briefly turned optimistic on the U.S. in March but is now back to preferring European equities.
However, she downgraded UK stocks to underweight in her note on Friday, citing the FTSE 100 index’s defensive tilt and exposure to the energy sector, which Manthey sees coming under pressure as she expects oil prices to retreat.
Bank of America Corp. strategist Michael Hartnett also said both stocks and bonds appear to be oversold. Still, he remains bearish on risk assets as, in contrast to Manthey, he expects a hard economic landing in the wake of higher-for-longer rates.
Relationships are key to our business but advisors are often slow to engage in specific activities designed to foster them.
Whichever path you go down, act now while you're still in control.
Pro-bitcoin professionals, however, say the cryptocurrency has ushered in change.
“LPL has evolved significantly over the last decade and still wants to scale up,” says one industry executive.
Survey findings from the Nationwide Retirement Institute offers pearls of planning wisdom from 60- to 65-year-olds, as well as insights into concerns.
Streamline your outreach with Aidentified's AI-driven solutions
This season’s market volatility: Positioning for rate relief, income growth and the AI rebound