Equities: Strong rebound supported by earnings growth – Danske Bank
Danske Research Team reports a strong rebound in global equities, with the S&P 500, Nasdaq, Stoxx 600 and Kospi all posting solid gains despite a recent Fed hike and further tightening priced.
Global equities experienced a strong rebound in the latest trading session, buoyed by robust earnings growth and a cautious approach to rate hikes. The S&P 500, Nasdaq, Stoxx 600, and Kospi all posted impressive gains, despite the recent Federal Reserve's rate hike and anticipated further tightening. Research from Danske Bank suggests that the consensus earnings growth of 35% and rising estimates create a challenging environment for a sustained equity sell-off.
This has led the bank to advocate a barbell strategy, favoring global tech stocks over industrials as valuations adjust. The AI trade, driven by semiconductor and memory stocks, along with big tech, emerged as the standout performer in the market. Analysts also point out that the rising estimates and contracting valuation multiples provide a cushion against higher rates, making it increasingly difficult for equities to experience a sustained sell-off or even a pause.
The regional performance highlights the resilience of risk assets, with the Gravitational Force on equities remaining higher.
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