Citigroup expects US stocks to face a larger correction in the future. So what happens next in the market? Many well-known investment institutions have commented on this. This article collects the latest opinion comments from various agencies for your reference.
S&P 500 Index
Royal Bank of Canada: Reduced the S&P 500 target from 3,000 to 2,890.
stock market
Goldman Sachs: Asian stock fundamentals are strong, and US trade restrictions are not enough to change the optimistic view of A-shares. Goldman Sachs analyst Timothy Moe and others said in the report that although Asian stock markets fluctuated in the first quarter, they expected profits to increase by 4%. As macro profit growth remained strong, Asian stock fundamentals were stable and valuations were “lowâ€.
The upcoming impetus includes the listing of CDRs by Chinese technology companies and the inclusion of A-shares in the MSCI International Index; Goldman Sachs' initial rating on A-shares is overweight. The "exogenous" risks include: US trade policy, US interest rates, and the stock market; however, Goldman Sachs said that trade and interest rate-related concerns are not enough to make Goldman Sachs change its views unless trade restrictions are significantly upgraded.
Goldman Sachs: Over the past 11 years, growth stocks have outperformed value stocks by 60%.
Citi: US stocks may face a larger correction in the future.
Citi expects that the stock market still has upside, but rising stock market volatility and a larger correction are possible. Citi's latest round of forecasts suggests that global stock markets will rise by about 8% by the end of this year, with European stocks leading the way, with an expected increase of 13%. But Citi warned that market risk is rising as market volatility rises.
At the same time, interest rates are rising, and this will increase the company's debt repayment costs, thereby reducing corporate profits and thus pushing down the stock market. But Citi believes that this will be an opportunity to buy on dips.
Paul Gambles, an investment consultant at MBMG Group, a financial consultancy, said that in response to the global financial crisis, we launched a large-scale stimulus, when stock prices were cheap, and there were too many downwinds behind financial support. This is a very dangerous situation, it is making bubbles, and the bubble is getting bigger and bigger. From the perspective of stock market capitalization, we are undoubtedly in the epic bubble, perhaps the biggest bubble in history.
Global simultaneous economic growth, monetary policy tightening and a “chaotic situation†around US politics (the US government’s stance on global trade) may mean that the valuation bubble may “actually be puncturedâ€.
Morgan Stanley: Downgrade the CSI 300 Index and the Hang Seng Index target price. Downgrade the Hang Seng China Enterprises Index, MSCI Emerging Markets and the Target Index.
trade war
Western Pacific 601099, stock bar: the risk of opening a trade war in the United States increased.
Western Pacific Bank analysts pointed out that in the current environment, the continued growth of the US economy is uncertain; economic policy needs to be carefully controlled; before Trump implemented his protectionist plan, the US economy has maintained a good momentum. As he has pointed out many times, the stock market is booming.
The International Monetary Fund predicts that the US economic growth rate will be 2.7% this year. US consumers will deleverage and create new jobs, but the irony is that many industries are now vulnerable to trade wars. In the end, it will be found that compromise measures will be taken between the United States and China, and European countries will remain American allies; however, this may take a long time; at the same time, financial markets may face continued uncertainty and thus will emerge fluctuation.
Danske Bank: Sino-US trade situation has cooled down and risky recovery. Danish Bank of Denmark said that overnight concerns about Sino-US trade friction have eased, and the risk sentiment in the financial market has recovered slightly. Last week, the Sino-US trade friction continued to attract attention. It is still expected that although the process may be bumpy, the two sides will eventually Achieve a solution to avoid triggering a trade war.
Emerging Markets
Morgan Stanley: Despite the easing of the trade dispute, emerging markets are expected to continue to be volatile. According to Morgan Stanley, although Chinese President Xi Jinping has made a soothing remark on trade issues and raised the possibility of reaching a settlement through negotiations, emerging markets will continue to be volatile.
James Lord and other Morgan Stanley strategists wrote in a report, "We are still in a camp that expects risk appetite to gradually pick up, and mainly through emerging market credit." Morgan Stanley said that the rebound in risk appetite will support emerging market currencies, but country-level factors are beginning to have a greater impact on index performance. The agency's strategists still hold constructive views on emerging market credit, but have limited exposure to money.
Federal Reserve
Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch: The trade war prospects and inflation threats are not the root cause of market turmoil this year, the Fed is.
The second phase of the Fed's rate hike cycle coincides with the S&P 500's 1.5% decline so far this year and two temporary fall into the correction zone. The Fed has embarked on a path of monetary tightening. The bank began to raise interest rates in December 2015 and began to reduce its balance sheet in October 2017, thereby accelerating the pace of interest rate hikes.
Bank of America Merrill Lynch Forex Strategist: The Fed’s tightening has been included in the market. Still bullish on the dollar.
Foreign exchange
USD/JPY, EUR/USD
Commerzbank: EUR/USD broke through 1.2340/50 or tested at 1.2476. Technical analysis by Commerzbank believes that once the euro breaks above 1.2340/50 against the dollar, it may try to test 1.2476.
On Monday (April 9), the modest recovery, once again returned to the previous trading range, the current need to fall to the February low of 1.2155, in order to confirm the top form construction. The short-term exchange rate is still limited by the 55-day moving average of 1.2340. The intraday wave pattern is different. The breakthrough of 1.2340/50 will rise to the end of March at the high of 1.2476. Breaking through the 2008-2018 resistance line of 1.2622 will point to a 50% Fibonacci retracement of 1.3190 since 2008, but the odds are not expected.
TD: The US dollar against the yen is expected to remain above 105.50, and the euro is under pressure at 1.24. TD Securities discussed the outlook for the US dollar and believes that the intensified trade tensions in the past few months have overshadowed the global macroeconomic performance. Under this background, the US dollar trading trend has not yet shown a clear direction, and the USDJPY is expected to remain stable at 105.50. Above, the euro against the dollar will be under pressure at 1.24.
Societe Generale 601166, stocks: strategically, it is better to sell the dollar against the yen.
The French Industrial Bank's cross-asset strategy research team discussed the outlook for the USD/JPY and considered it appropriate to adopt a rallying sell-off strategy, but wait for better points to emerge, the market continues to clear the yen's empty position, and the USD/JPY is trying to move further. Breaking up, but this is a good thing for short operations, and currently intends to find a better place to short.
Morgan Stanley: tactical long dollar against the yen, target 110. The Morgan Stanley research team suggested a bearish decline in the dollar after the recent non-agricultural announcement, and said it would consider doing more USD/JPY and targeting 110.
The US non-farm payrolls report is significantly lower than the market consensus, which has surprised the market and weakened the dollar, but we think this is a buying opportunity. We tactically bearish on the yen as Japanese banks reduce their dollar-denominated financing and directly inject funds into US dollar bank deposits in response to the growing LIBOR-OIS spread, which currently exceeds 59 basis points, which will The yen is weak.
In addition, the yen's bullish position is still over-extended, which means there is a possibility of a correction.
USD/KRW
South Korea's Woori Bank: Won rose, because of the risk appetite caused by President Xi Jinping's speech. Min Gyeong-won, an economist at Woori Bank of South Korea, said that after Chinese President Xi Jinping gave a speech at the Boao Forum for Asia, the market established risk appetite and helped boost the trend of the won. He believes that the risk of the US dollar against the Korean won falling below 1064-1065 is still high, and the currency pair may fluctuate around the middle of 1065 on Tuesday.
Due to the exporter’s dollar selling and the lack of further upward momentum in the US dollar, the current uptrend in the earlier trading was blocked in the lower 1070. As investors wait for the Korea-DPRK summit to be held, the spot exchange is expected to fluctuate between 1050-10075 for the time being.
GBP to USD
Bank of New York Mellon: The pound is nearing the turning point against the dollar. Simon Derrick, chief currency strategist at Bank of New York Mellon, believes that the pound has hit an inflection point against the dollar; the main driver of the foreign exchange market, the interest rate is favorable to the dollar, because the US interest rate is higher than expected.
Derrick said that the 10-year US and UK government bond yields are at the lowest level of support for the pound since 1984 (the pound was trading at 1.2400 at the time); the current pound is at 1.41 against the dollar, indicating that the exchange rate is too high and the callback is coming . In addition, the pound bulls are also at their highest level since July 2014. Although this indicates that the market is optimistic about the pound, it may be a reverse indicator; technically, the exchange rate is still blocked below the 200-week moving average. This may be the top of the exchange rate this year, and it is difficult for the exchange rate to break through.
ING: Strongly bullish on the pound, with a target of 1.45 in the second quarter.
ING discussed the prospect of the pound against the dollar, and maintained a strong bullish stance against the pair in April. All factors supported the exchange rate to rise to 1.45 in the second quarter. The bank has maintained this view for a long time; in addition, historical data, 4 The monthly G10 currency showed strong seasonal characteristics, and the pound was the most obvious against the US dollar. In this context, the exchange rate is expected to rise moderately, or at least stabilize.
Citi: GBP/USD will hit 1.4345 in 6-12 months.
Citigroup said that according to our actual effective exchange rate indicator, the pound is still seriously undervalued; in addition, capital flows in the form of net foreign direct investment data (FDI) and the Bank of England's position are more hawkish. For Brexit, the UK and the EU reached a transitional agreement to reduce the probability of hard Brexit, which may boost the pound; the pound is expected to hit 1.4345 against the dollar in 6-12 months, and the pound will hit 1.18 against the euro.
USD/CAD
Scotiabank: It is expected that the US dollar against the Canadian dollar will fall to 1.25 in the next few weeks. The rise in oil prices will benefit the Canadian dollar. Macro data and the North American Free Trade Agreement (NAFTA) news have become more favorable to the Canadian dollar.
Canadian Imperial Commercial Bank: Strategic short-selling against the Canadian dollar, target 1.2485, stop loss at 1.2885.
EUR/GBP
Danske Bank: It is advisable to sell the euro against the pound at a high price, with a target of 0.8650. Denmark's Danske Bank believes that it is better to sell the euro against the pound, and the exchange rate continues to trade around 0.87. A break below this level may open up the space to test the lower limit of the recent trading range of 0.8650.
The series of UK economic data to be released this week is unlikely to change the Bank of England's interest rate hike expectations in May. The pound is likely to remain supported before the meeting. However, the latest IMM position report shows that the sterling speculative position is in extreme value, rising to the highest level in 2014, suggesting that the pound may be relatively sensitive to bad news and profit-taking. Strategically, before the Bank of England’s May interest rate decision, it tended to sell the euro against the pound.
GBP to USD
UOB Bank: GBP/USD may continue to rise to 1.4200 in the coming weeks.
UOB's technical analysis believes that the pound may continue to rise to 1.4200 against the US dollar in the next few weeks, and it may fluctuate within the range of 1.4095-1.4165. In the next one to three weeks, the pound has already exceeded the upper limit of the adjustment range of 1.3935-1.4160, and the short-term continued to strengthen. Surprisingly, the improvement in the upper level of action suggests that there is room to test the resistance level of 1.42, but it is difficult to continue to break.
US dollar against ruble
Morgan Stanley: The risk of ruble assets is outstanding, with 95% of investors turning the ruble into a cheap sale.
Brown Brothers Harriman Bank: More severe sanctions will weigh on the Russian economy.
Arc Chan Chanler, head of global foreign exchange strategy at Brown Brothers Harriman Bank, pointed out that recent US sanctions against Russia have caused damage to Russian assets; US entities have been banned from doing business with individuals and companies on the sanctions list, which basically cut off the companies’ All foreign funds. The country’s Prime Minister, Medvedev, asked the cabinet to develop measures to support the sanctioned companies, but did not assume the obligation of debt, otherwise support measures would be difficult to achieve. Russia also threatened to retaliate, but it is still unclear what the country can do under such widespread sanctions.
The Russian economy is recovering, but it is still sluggish; as the country may be hit hard by the latest round of sanctions, we expect economic growth to bear downside risks. The bank's exchange rate model shows that the ruble has strong fundamentals; however, the sanctions are a game changer, so the ruble seems likely to continue to depreciate.
USD/CHF
Commerzbank: USD/CHF may retreat to 0.9525/0.9425. Karen Jones, head of fixed-income technology analyst at Commerzbank, pointed out that given the recent price movements, USD/CHF may fall back and test the 0.9525/0.9425 area.
USD/CHF challenged the 200-day moving average at 0.9658 and then retraced; we speculate that this will trigger more profit-taking, and the exchange rate is expected to retreat to the trend support line of 0.9525 and the March 14 low of 0.9425. The resistance of the 200-day moving average has increased resistance near the 0.9691/98 area of ​​the 55-week and 200-week moving averages, and we believe that this stubborn resistance zone will require multiple challenges to clear.
If the exchange rate stands on the 55-week and 200-week moving averages, the next upside target will point to the 78.6% Fibonacci retracement level of 0.9824. We still believe that USD/CHF has formed a bottom at 0.9188. If the exchange rate fell 0.9425 level, it may further retracement to the end of February and early March lows 0.9339 / 25 area.
(Editor: Wang Zhiqiang HF013)
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