Post on 16-Jul-2020
MONTHLY MARKET OUTLOOK
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MONTHLY MARKET OUTLOOK
•
• US leading economic indicators do not appear excessive.
• Policy risks remain, but Citi analysts do not see the Fed among them.
•
•
Citi
analysts are neutral global equities
“The demand
backdrop remains
resilient across
the world.”
MONTHLY MARKET OUTLOOK
•
• High quality US fixed income.
• Extend duration in high quality bonds.
•
• External emerging market (EM) debt.
“12-month
global bond
returns are the
highest since
2001.”
As surging bond prices drove an 11% global fixed income return over the past year, Citi
analysts remain underweight on the asset class. US bonds remain an overweight, but only on
a relative basis.
MONTHLY MARKET OUTLOOK
•
• 1. The Status Quo of the Trump Administration: Energy Dominance:
• 2. The Future is Green: Keep it in the Ground: This scenario calls for the elimination of US
fossil fuels use and production and is most extreme scenario relative to the status quo. This
may include policies that are highly disruptive to the economy and individual sectors over
the short- and long-run. Even a 15-year adoption period points to a stint of negative GDP
growth and a challenging transition.
• 3. Middle Ground: A Spectrum of Policies: Should a Democrat win the election, Citi analysts
anticipate a mix of carbon and drilling taxation changes. Increased regulation of
methane/flaring/hydrocarbon infrastructure; adoption of new efficiency standards, and
greater support for renewables and low-carbon technologies, with potentially less acute
short-term economic disruptions and a smoother energy transition, helped by US state and
local level policies.
As the US Presidential Election season progresses, energy politics matter given its weight in
the US economy. Citi analysts anticipate three possible scenarios following the US election.
“Status quo
could see
increased
fossil fuels
demand.”
MONTHLY MARKET OUTLOOK
• USD:
• EUR:
• GBP:
• JPY:
• AUD:
• Asia:
“G7 FX volatility
does not look
poised to break
out significantly.”
In recent months, geopolitical shocks have been the catalyst for higher volatility in asset
markets in general. However, G7 FX volatility remains closer to all-time lows than 2019 highs.
MONTHLY MARKET OUTLOOK
Last price 52-Week 52-Week
31-Oct-19 High Low 1 week 1 month 1 year Year-to-date
US / Global
Dow Jones Industrial Average 27046.23 27398.68 21712.53 0.90% 0.48% 7.69% 15.94%
S&P 500 3037.56 3050.10 2346.58 0.91% 2.04% 12.02% 21.17%
NASDAQ 8292.36 8339.64 6190.17 1.30% 3.66% 13.50% 24.97%
Europe
MSCI Europe 461.41 465.30 390.84 0.22% 3.18% 7.87% 14.24%
Stoxx Europe 600 396.75 399.88 327.34 -0.16% 0.92% 9.72% 17.50%
FTSE100 7248.38 7727.49 6536.53 -1.09% -2.16% 1.69% 7.73%
CAC40 5729.86 5778.24 4555.99 0.80% 0.92% 12.49% 21.12%
DAX 12866.79 12986.49 10279.20 -0.04% 3.53% 12.40% 21.86%
Japan
NIKKEI225 22927.04 23008.43 18948.58 0.78% 5.38% 4.59% 14.55%
Topix 1667.01 1696.14 1408.89 1.42% 4.99% 1.27% 11.57%
Emerging Markets
MSCI Emerging Market 1041.98 1099.18 945.28 0.44% 4.09% 9.00% 7.89%
MSCI Latin America 2777.45 2980.17 2455.80 -0.91% 4.14% 4.25% 8.24%
MSCI Emerging Europe 183.38 186.98 148.32 0.27% 7.47% 19.02% 20.54%
MSCI EM Middle East & Africa 251.07 266.27 235.96 -1.31% 2.48% 7.13% 4.43%
Brazil Bovespa 107219.80 108407.50 83891.74 0.22% 2.36% 22.64% 22.00%
Russia RTS 1422.92 1451.26 1033.31 0.66% 6.67% 26.35% 33.14%
Asia
MSCI Asia ex-Japan 645.51 687.70 575.94 1.18% 4.49% 10.53% 8.20%
Australia S&P/ASX 200 6663.37 6875.50 5410.20 -0.45% -0.37% 14.29% 18.01%
China HSCEI (H-shares) 10533.24 11881.68 9731.89 0.00% 3.26% 3.89% 4.03%
China Shanghai Composite 2929.06 3288.45 2440.91 -0.40% 0.82% 12.54% 17.45%
Hong Kong Hang Seng 26906.72 30280.12 24896.87 0.41% 3.12% 7.71% 4.11%
India Sensex30 40129.05 40392.22 34303.38 2.84% 3.78% 16.51% 11.26%
Indonesia JCI 6228.32 6636.33 5747.53 -1.76% 0.96% 6.80% 0.55%
Malaysia KLCI 1597.98 1732.27 1548.45 1.71% 0.89% -6.51% -5.48%
Korea KOSPI 2083.48 2252.05 1891.81 -0.10% 0.99% 2.65% 2.08%
Philippines PSE 7977.12 8419.59 6820.22 0.33% 2.55% 11.72% 6.85%
Singapore STI 3229.88 3415.18 2993.42 1.93% 3.52% 6.99% 5.25%
Taiwan TAIEX 11358.71 11428.42 9319.28 0.34% 4.89% 15.88% 16.77%
Thailand SET 1601.49 1748.15 1546.62 -1.20% -2.18% -4.05% 2.40%
Commodity
Oil 54.18 66.60 42.36 -3.65% 0.20% -17.04% 19.31%
Gold spot 1512.93 1557.31 1196.33 0.59% 2.75% 24.55% 17.97%
Historical Returns (%)
MONTHLY MARKET OUTLOOK
Last price
Currency 31-Oct-19 Dec-19 Mar-20 Jun-20 Sep-20
G10-US Dollar
Euro EURUSD 1.12 1.10 1.10 1.10 1.12
Japanese yen USDJPY 108.0 106 105 104 102
British Pound GBPUSD 1.29 1.3 1.31 1.32 1.33
Swiss Franc USDCHF 0.99 1.00 1.01 1.02 1.01
Australian Dollar AUDUSD 0.69 0.68 0.68 0.69 0.70
New Zealand NZDUSD 0.64 0.63 0.64 0.64 0.64
Canadian Dollar USDCAD 1.32 1.30 1.29 1.28 1.27
EM Asia
Chinese Renminbi USDCNY 7.04 7.19 7.26 7.34 7.21
Hong Kong USDHKD 7.84 7.83 7.84 7.84 7.83
Indonesian Rupiah USDIDR 14,041 14154 14267 14379 14449
Indian Rupee USDINR 70.9 72.1 71.4 70.6 70.9
Korean Won USDKRW 1,164 1218 1223 1229 1222
Malaysian Ringgit USDMYR 4.18 4.20 4.21 4.23 4.16
Philippine Peso USDPHP 50.8 51.9 52.1 52.3 52.3
Singapore Dollar USDSGD 1.36 1.39 1.40 1.41 1.39
Thai Baht USDTHB 30.2 30.2 30.1 30.0 30.2
Taiwan Dollar USDTWD 30.5 31.1 31.2 31.3 31.3
EM Europe
Czech Koruna USDCZK 22.88 23.6 23.5 23.5 23.0
Hungarian Forint USDHUF 295 304 304 304 301
Polish Zloty USDPLN 3.82 3.95 3.94 3.93 3.86
Israeli Shekel USDILS 3.52 3.50 3.49 3.48 3.48
Russian Ruble USDRUB 64.1 66.4 67.1 67.9 68.3
Turkish Lira USDTRY 5.71 6.16 6.50 6.84 6.96
South African Rand USDZAR 15.10 15.13 15.18 15.24 15.21
EM Latam
Brazilian Real USDBRL 4.02 4.01 3.99 3.96 3.94
Chilean Peso USDCLP 741 717 712 706 704
Mexican Peso USDMXN 19.2 19.8 19.9 20.0 20.1
Colombian Peso USDCOP 3380 3413 3398 3383 3367
Forecasts
MONTHLY MARKET OUTLOOK
Indonesia