· JPMorgan says stocks in these sectors will lead markets higher as economy recovers
Investment bank JPMorgan expects cyclical stocks to lead the market higher in the medium- to long-term as the business cycle improves.
“You’re going to see cyclicals and more defensive names continue the rally after we get past this period of adjustment,” said James Sullivan, head of Asia ex-Japan equity research at JPMorgan.
Cyclical stocks are companies whose underlying businesses tend to follow the economic cycle of expansion and recession. Some of these include sectors such as finance, energy and industrial. Defensive stocks — such as health care and consumer staples — typically provide consistent earnings and dividends regardless of stock market conditions.
Global stock markets wobbled in recent weeks as bond yields rose, driven by optimism in the vaccine rollout for Covid-19 and the resumption of consumption spending.
The move fueled expectations of higher inflation and investors worried it would prompt central banks to raise interest rates. Higher interest rates can knock down stocks with relatively high valuations.
· Asian stocks up on dovish ECB as Biden signs stimulus
Asian shares rose on Friday after U.S. President Joe Biden signed a $1.9 trillion stimulus bill into law, and after a dovish European Central Bank meeting prompted a retreat in bond yields and eased global concerns about rising inflation.
But European shares, which had jumped on Thursday’s ECB meeting, looked set to retreat from a one-year peak a day later. Pan-region Euro Stoxx 50 futures were down 0.03% and both German DAX futures and FTSE futures were down about 0.2% in early deals.
MSCI’s broadest gauge index of Asia-Pacific shares outside Japan gained 0.53%, supported by tech gains.
Seoul’s KOSPI added 1.39%, Taiwan shares were up 0.27% and Australia’s ASX 200 gained 0.79%.
U.S. Treasury yields were higher on Friday, with the 10-year yield at 1.5512% after falling to 1.475% overnight, its first foray below 1.5% in a week.
The German 10-year yield was last at -0.331% after hitting a three-week low of -0.367%.
Sentiment was also boosted by weekly jobless claims data, which pointed to a recovering U.S. labor market as vaccine rollouts helped lead to economic reopenings.
· Japan stocks end higher as tech sector back in favour
Japanese shares rose for a fourth straight session on Friday, as technology stocks bounced back while expectations that low interest rates and big fiscal spending would continue to support global economic growth kept investor sentiment supported.
The Nikkei 225 Index ended up 1.73% at 29,717.83. The broader Topix rose 1.36% to 1,951.06. For the week, the Nikkei and Topix gained nearly 3% each.
Technology and energy shares rebounded from recent losses following their U.S. peers, but that was partly offset by selling in the real estate and financial sectors.
Overall sentiment remained positive because of strong expectations that the global economic growth will accelerate as more countries vaccinate their citizens for the novel coronavirus.
· China stocks post weekly drop on policy tightening worries
China shares posted a weekly loss on Friday as a conservative 2021 economic growth target sparked fears Beijing could tighten policy to rein in lofty valuations, though infrastructure firms helped benchmark stock indexes eke out gains for the day.
The blue-chip CSI300 index rose 0.4% to 5,146.38, while the Shanghai Composite Index added 0.5%to 3,453.08.
· European markets pull back as Treasury yields climb again
European markets retreated slightly on Friday, but are still on course for a positive week, as a rise in Treasury yields resurfaced some investor caution.
The pan-European Stoxx 600 fell 0.4% in early trade, with tech stocks shedding 1.3% to lead losses as almost all sectors and major bourses slid into the red.
Reference: CNBC, Reuters, FXStreet
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