Citigroup hikes U.S. equities to ‘overweight’, sees demand for growth stocks

© Reuters. FILE PHOTO: The logo for Citibank is seen on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 3, 2021. REUTERS/Andrew Kelly

(Reuters) – Citigroup (NYSE:C) upgraded U.S. equities to “overweight” rating on Thursday on analysts’ expectations of a revival in appetite for growth stocks due to a sharp drop in bond yields following the Ukraine-Russia crisis.

Bond yields plunged after Russia’s invasion of Ukraine last week ramped up the prospects of inflationary risks, but the expectations of interest rate hikes from major central banks have dropped.

“Despite the difficult events in Ukraine, global equities have been fairly robust. The latest plunge in real yields does imply that this year’s derating of growth stocks should stop,” said economist Robert Buckland.

U.S. Treasury yields surged on Wednesday, bouncing off eight-week lows, as Federal Reserve Chair Jerome Powell supported the U.S. central bank raising rates this month, while being flexible in response to the Russia-Ukraine war’s impact on the economy.

The benchmark 10-year yield (US10YT=RR) rose to 1.875% on Wednesday after its 1.682% dive in the prior session – the lowest since Jan. 5.

Citigroup said shares of companies in its list of 60 stocks with “meaningful exposure to Russia” slumped 17% so far this year, compared with an 8% drop in the MSCI’s gauge of stocks across the globe.

PepsiCo (NASDAQ:PEP), Glencore (LON:GLEN), Carlsberg (CSE:CARLa) Epam Systems and Uniper are some of the big names in the list.

The brokerage raised the global IT sector to “outperform”, citing its robust performance growth of 2% since the Ukraine-Russia conflict, according to Citigroup’s analysis.

Citigroup also downgraded the rating of Japan and global industrial sector to “neutral” and maintains the “overweight” rating of UK and global financial sector.

Citigroup hikes U.S. equities to ‘overweight’, sees demand for growth stocks

Disclaimer:Fusion Mediawould like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

What's your reaction?

In Love
Not Sure

You may also like

Leave a reply

Your email address will not be published.

More in:News