Incredibly unfazed by the market’s turbulent start to the year the strategists of Goldman Sachs Group Inc to UBS Global Wealth Management reiterated their bullish views on betting that equity markets will be able to endure higher interest rates and higher bond yields.
“The selling of certain high quality long-term duration names could be finished in the near future,” Goldman strategists led by Cecilia Mariotti wrote in a note issued on Monday. Since real yields are not likely to rise much, “valuations are unlikely to be a binding constraint on the stock market,” the strategists wrote in an email.
U.S. stock market futures increased on Tuesday after the most disappointing start of the calendar year for the S&P 500 — and European benchmarks retreated, showing some indications that the downturn could be slowing. The possibility of could mean that Federal Reserve may tighten policy more quickly than anticipated triggered selling across both sides of the Atlantic in the U.S., with higher-priced technology and growth stocks the most affected.
“While investors should be ready for risk as they adapt to the more aggressive tone of the Fed and the most recent outbreak of Covid-19 However, we are still expecting that the rally will continue,” Mark Haefele, chief investment officer at UBS Global Wealth Management wrote in a note published on Tuesday. “The gradual normalization of Fed policy should not affect the prospects for profits,” supported by increased consumer spending and the ease of accessibility to capital.
To an already crowded list of promises that an increasingly expansive Fed does not significantly alter the prospects for stocks, BlackRock’s Investment Institute recommended investors use sales to boost risk. JPMorgan Chase & Co. strategists declared on Monday that it’s time to invest in to buy the “arguably too much” dip.
The optimism is also evident throughout Europe the region that is regarded as an opportunity to be a safe haven in the face of rising rates and stocks that tend to be cheaper and less susceptible to increases.
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