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Citi: 'Buy on the Dips' Despite Bigger Market Corrections on Horizon

Citi: 'Buy on the Dips' Despite Bigger Market Corrections on Horizon
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By    |   Monday, 09 April 2018 11:23 AM

Global equity analysts at Citigroup are advising savvy investors to “buy on the dips” despite their belief that bigger stock market corrections are looming.

"Our Global Equity Quarterly recommends buying equities on the bigger dips," the bank said in a note Monday. "Our latest round of forecasts imply a rise in global equity markets of about 8 percent to the end of the year, led by Europe with about 13 percent," CNBC cited the bank as reporting.

The forecasts are based on “expectations of higher economic growth across the world and increased room for investments from several companies due to tax cuts” in the U.S., CNC reported.

However, the bank warned that risks are rising due to increased market volatility and higher interest rates.

Stocks "entered phase 3 of the credit/equity clock; the period towards the end of the cycle when credit spreads start to widen, but equity indices continue rise," Citigroup said.

"Thus, we still see upside for equity markets, but we caution that higher volatility and bigger corrections are likely," it said. "The conclusion is to judiciously buy on dips," the team said.

Wall Street rebounded from last week’s trade tariff driven selloff to open higher on Monday, taking comfort in comments from the Trump administration officials who stressed the trade dispute with China could be resolved through talks, Reuters explained.

The week also marks the start of earning season. Investors expect tax cuts to help corporate America show its biggest quarterly profit growth in seven years.

Global markets came under pressure last week as the United States and China threatened each other with tens of billions worth of tariffs. Investors remained on edge as they feared protectionist measures would hit global economic growth.

But Trump’s Chief Economic Adviser Larry Kudlow said in a CNN interview on Sunday the ongoing spat “might turn out to be very benign.”

Trump echoed Kudlow’s sentiment in a Twitter post that said any tariffs would be reciprocal and that he saw a “Great future for both countries!”

“One of the reasons why we’re seeing quite a strong rally at the opening is that the administration over the weekend, including Mr Trump, basically tried to deflate the fears of a trade war,” said Peter Cardillo, chief market economist at First Standard Financial in New York.

“It appears the market has entered into a trading range and is basically fluctuating ahead of the earnings season,” he told Reuters.

(Newsmax wire services contributed to this report).

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Global equity analysts at Citigroup are advising savvy investors to “buy on the dips” despite their belief that bigger stock market corrections are looming.
citi, buy, dips, market, correction, investors
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2018-23-09
Monday, 09 April 2018 11:23 AM
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