Equities have performed very well in the first quarter of the year. Where do we go from here?
Key takeaways
- After a strong 5-month rally, global equity markets, driven by the mega caps, are implicitly factoring in a strong rebound in the economy and profits.
- A breather and/or a broadening of the participants in this rally make sense, opening a window of opportunity for lagging cyclical and value stocks.
- European markets could participate, with small caps also joining in eventually. Their profits have started to outperform, unlike their share prices, making them more attractive.
Japan leads the major equity markets (Topix +17%) so far this year. The US and Europe are more or less on an equal footing, depending on the index: the S&P500 (+10.2%) outperformed the Stoxx600 (+7.1%), but the EuroStoxx50 (+12.4%) beat the Nasdaq100 (+8.5%) over the period, which shows that European blue chips are performing better than their US peers. How far could this rally go?
You can now read the full whitepaper at the link below
