US equities appear to have modest gains at the opening on Thursday after Wednesday’s sale of the technology on Wall Street.
Overnight, Chinese technology stocks were hit while the US securities regulator said it had enacted a new law that could lead to a withdrawal from US markets.
Despite recent pressure on stocks, in call of the day, Barclays said that “all systems work”, the risk rally will continue and the global growth set for the fastest pace in the last four decades.
The bank, in its latest global outlook, said fears of overheating the US economy would not derail the risk rally, urging investors to remain overweight on equities.
“Yes, the multiples of equity have expanded in the last year, but much of the rally was due to the absolutely amazing recovery in earnings,” said macro research chief Ajay Rajadhyaksha.
He mentioned that the S&P 500 SPX,
earnings were not expected to reach 2019 levels until at least 2021, but earnings in the fourth quarter of 2020 exceeded those of a year earlier. “A full V-shaped recovery within a year, despite the context of continuing pandemic restrictions,” he added.
The earnings outlook, a consensus for more than 21% growth between 2020 and 2021, was another reason to be optimistic, Rajadhyaksha said.
Stock market valuations may seem high compared to history, but “the scale of positive news expected in the coming quarters means that stocks still don’t seem expensive to us,” Barclays added.
The bank maintained an S&P 500 target of 4,000 at the end of 2021, and in US stocks was overweight in industry and healthcare, as well as hardware and semiconductors. Strategies added that the assessments seemed more attractive in the UK and the euro area, despite the slow launch of the COVID-19 vaccination.
In Europe, the bank has excessive shares in stocks, such as financial and commodity stocks, but is more selective in cyclical and underweight defensive sectors.
Even the sale of bonds in the first quarter, which threatened to stop the rally, only reflected a brighter growth picture, but Barclays said it remains a risk.
“It is true that the flight in ointment is the sale of bonds and the fear that inflation will force the Fed into an aggressive hiking cycle that crushes the risk rally. We believe that these fears are exaggerated “, said the bank.
“The bond market did its best to discourage the risk rally in the first quarter. And it failed. “
Chart
Russell 2000 RUT,
closed below the 50-day moving average (DMA), but by more than 20% above the 200-day moving average on Tuesday, for the first time in the index’s 42-year history, Bespoke Investment Group said. The worst day of the index in almost a month ended the longest series of closures above the 50-day moving average in the last 10 years.
Bespoke Investment Group
Four times the index closed below 50-DMA and more than 15% above 200-DMA took place “early in the multi-year gain markets,” Bespoke added.
markets
US ES00 futures,
YM00,
NQ00,
showed slightly higher ahead of the opening, with Nasdaq futures rising 0.2% after the COMP-tech index,
fell 2% on Wednesday. European stocks have declined as concerns about a third wave of coronaviruses on the continent remain in the spotlight. Oil prices fell early on Thursday, after rising on Wednesday amid the continued blockade of the Suez Canal.
Buzz
AstraZeneca AZN,
announced the updated phase 3 data of its vaccine on Wednesday night, saying it is 76% effective in preventing symptomatic COVID-19. The British-Swedish drug company initially said on Monday that its vaccine has an effectiveness rate of 79%.
H&M HM.B,
and other clothing and footwear brands, including Nike NKE,
and Adidas ADS,
is facing a negative reaction in China because it has raised concerns about forced labor in the Xinjiang region.
GameStop GME,
the stock suffered its worst day in seven weeks on Wednesday, after fourth-quarter profit and sales missed expectations. The shares of the video game retailer were also downgraded by Wedbush analyst Michael Pachter.
The Suez Canal, one of the most important trade routes in the world, was blocked by a large cargo ship, while efforts to free the ship entered its third day.
The European Union has established proposals for tougher controls on COVID-19 vaccine exports to the UK and other countries with better vaccination rates. The proposals will be debated on Thursday, but tensions between the UK and the EU could be eased by a reported co-operation agreement.
Random readings
The new 50-pound British banknote honoring mathematician Alan Turing will feature GCHQ’s “toughest puzzle in the world.”
A pleasant catch: The fisherman saves the boy trapped on the ice.
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