· Citi sees no further upside for world stocks in 2021
Citi expects world stocks to hover around current levels in 2021 and cuts U.S. equities to “neutral” as lockdowns induced by fresh waves of COVID infections roil global economies.
The bank upgraded emerging market and UK equities to “overweight” in a note published on Thursday, citing their reasonable valuation and robust earnings momentum. It also expects weakening U.S. dollar to help these markets outperform.
With global equities trading at 20 times 12-month forward earnings, the Wall Street bank sees no further upside as the valuation is well above the long-term median of 15 times forward earnings.
U.S. valuations are at a whopping 23 times forward earnings.
· Stock futures rise, adding to Wednesday’s gains, despite turmoil at U.S. Capitol
U.S. stock futures rose in overnight trading on Wednesday as investors digested the likely event of a Democratic held Congress and continued to look past riots at the U.S. Capitol.
Dow Jones Industrial average futures rose 125 points. S&P 500 futures gained 0.6% and Nasdaq 100 futures added 0.9%.
· Democrat Senate win drives stocks higher, bonds lower
Bonds nursed losses while stocks and commodities gained on Thursday in anticipation of a big borrowing and big spending Democrat administration driving growth, following runoff elections that gave the party control of U.S. Congress.
U.S. Treasuries had suffered their steepest selloff in months after Democrat victories in two Georgia races handed them narrow control of the Senate, bolstering President-elect Joe Biden’s power to pass his agenda.
Risk sentiment was temporarily dampened by images of President Donald Trump’s supporters storming Capitol Hill, but S&P 500 futures rose 0.6% and Nasdaq 100 futures rose 0.8% in the Asia session as order was restored. FTSE futures rose 0.4% and EuroSTOXX 50 futures rose 0.2%.
Across Asia, big economically exposed stocks led gains. Chipmakers Samsung and SK Hynix drove South Korea’s Kospi to a record high. Miners Rio Tinto and BHP surged to all-time peaks.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.7% and Japan’s Nikkei rose as much as 2% to hit its highest since 1990.
· Nikkei hits 30-year high as financials gain on Democrat control of Senate
Japanese shares ended higher on Thursday, with the Nikkei touching a 30-year peak, powered by financials as U.S. bond yields climbed on hopes of larger stimulus following a Democrat sweep in two Senate runoffs in Georgia.
The Nikkei average closed 1.60% higher at 27,490.13, hitting its highest level since August 1990 at one point during the session and snapping a four-day losing streak.
The broader Topix added 1.68% to 1,826.30, climbing above a peak hit late last year to reach its highest level since October 2018.
Investor appetite was not dented by the chaos in Washington D.C. after supporters of President Donald Trump stormed Capitol Hill, forcing Congress to suspend a session to certify President-elect Joe Biden’s victory.
· China stocks extend gains, blue-chip index ends at 13-year high
China stocks extended gains into a sixth session on Thursday, with the blue-chip index settling at a 13-year high, underpinned by the consumer and financial sectors.
At the close, the Shanghai Composite index was up 0.71% at 3,576.20. The blue-chip CSI300 index was up 1.77% at 5,513.66, the strongest close since January 2008. ** Gains were led by the consumer and financial sectors, with the sub-indexes climbing 1.58% and 1.02%, respectively.
The smaller Shenzhen index ended down 0.08% and the start-up board ChiNext Composite index closed 1.519% higher.
Market sentiment was also supported by the central bank’s pledge to keep its monetary policy accommodative. The People’s Bank of China said on Wednesday it would make its monetary policy flexible, targeted and appropriate in 2021, focusing on supporting small firms as the economy recovers.
· European markets gain after projected Democrat Senate win
European stocks traded higher on Thursday following a projected win for Democrats in the U.S. Senate following dramatic scenes when pro-Trump rioters stormed the U.S. Capitol building.
The pan-European Stoxx 600 gained 0.6% in early trade, basic resources adding 2.5% to lead gains while tech stocks dropped 0.3%.
Reference: CNBC, Reuters
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