Equities: Energy relief drives risk-on cascade – Danske Bank
Danske Research Team describes a strong, broad-based risk-on session in equities, catalyzed by declining Oil price.
In a broad-based risk-on session, equities experienced a strong move higher, driven by a decline in oil prices. Danske Research Team highlights how this drop in energy costs lessens inflation expectations, making central banks more dovish and boosting confidence. Cyclicals, particularly technology, led the market, with the Nasdaq reaching a record high and MSCI World nearing its peak.
The robust growth and earnings backdrop is likely to continue influencing market dynamics throughout the year. The decline in oil prices is a major catalyst for this market response, as fears of an energy crisis fading away. Despite technology outperforming health care by almost 30%, health care estimates have been cut by around 5%, making it more expensive this year.
The energy situation remains the main constraint on further market upside, with cyclicals outperforming decisively.
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