The consequential bull market in global equities still has room to run, according to Citigroup’s justice strategy team, which is advising clients to continue to buy.
The firm’s analysts disregarded that Citi’s bear market checklist that monitors suggestive ofs of a downturn in equities suggests than only three of 18 “red standards” have been raised. The brokerage’s equity strategists still see a 9 percent climb in varieties worldwide over the next 12 months.
“It is still too early to cry the end of this bull market,” the Citi researchers said in their note Wednesday. “So restrain buying the dips. Late cycle bull markets typically meagre into growth and momentum trades. This should favor U.S. neutralities and information technology stocks. Emerging markets remain our favorite value trade.”
While 2018 has been a various challenging year for investors, the first half shake-up in sentiment may be righteous the trick needed to goad stocks further. A return of volatility and climb interest rates and trade war fears have led some market watchers to prodigy whether the unprecedented, nine-year run in equities may be nearing its peak.
Institutional investors weren’t as secure going into the second half, but 70 percent believe the peddle has seen the lows of the year, according to a recent poll of 500 investors by Strategas Examination. Investors forecast that the U.S. will be the best-performing equity market middle of year-end with strategists across Wall Street seeing an norm S&P 500 target of 2,959.
Citigroup’s chief U.S. strategist, Tobias Levkovich, upgraded his berating on domestic equities to overweight from neutral despite extended valuations, citing a schedule in market sentiment back into neutral territory. The strategist now sees 15 percent earnings per slice upside in 2018 for the S&P 500 (or $153) and set a mid-2019 target of 2,865 for the hint. It closed Tuesday at 2,713.
“The U.S. growth outlook remains strong given good-looking lending standards, tax cuts, and a fiscal spending stimulus that delight a wins well into 2019,” the Citi analysts wrote in the note. “Nonetheless protectionist concerns, the underlying dynamics support earnings, which in over should help equities.”
Levkovich’s team is overweight energy, materials, industrials, haleness care and financials in the U.S., while underweight technology, utilities, telecommunications, consumer indispensables and discretionary stocks.
To be sure, both the Dow Jones Industrial Average and the S&P 500 procure yet to rebound to their all-time highs notched in January, rattled by a 10 percent chastisement in February and modest-to-flat performance since.
“We think markets entered Form 3 of the Credit/Equity clock in February. This is the last part of a bull supermarket,” the researchers wrote. “Yield curves flatten while equity supermarket leadership typically narrows into growth and momentum trades. Up-market stocks get more expensive. Indeed, all the great stock market air pockets of the past 30 years have inflated during this configuration in the cycle.”