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Stock markets on the upswing: How sustainable is the Christmas rally? Uncertainties about the global economy and interest rates remain.
According to a report from www.nzz.ch, the stock markets are experiencing a strong upswing, with investors hoping for a so-called Christmas or year-end rally. The hope is based on consumers' increased desire to spend, which was aroused by promotions and discounts during Black Friday, as well as on the positive developments on the stock markets since the beginning of the year. But experts warn against relying solely on a “Christmas rally” as stock market developments continue to be characterized by uncertainty. According to Björn Eberhardt, head of the investment office at Luzerner Kantonalbank, there is no clear evidence that Black Friday or the sectors that benefit from it are driving stock markets at the end of the year. …
Stock markets on the upswing: How sustainable is the Christmas rally? Uncertainties about the global economy and interest rates remain.
According to a report from www.nzz.ch, the stock markets are experiencing a strong upswing, with investors hoping for a so-called Christmas or year-end rally. The hope is based on consumers' increased desire to spend, which was aroused by promotions and discounts during Black Friday, as well as on the positive developments on the stock markets since the beginning of the year. But experts warn against relying solely on a “Christmas rally” as stock market developments continue to be characterized by uncertainty.
According to Björn Eberhardt, head of the investment office at Luzerner Kantonalbank, there is no clear evidence that Black Friday or the sectors that benefit from it are driving stock markets at the end of the year. Furthermore, there is a possibility that the rally is already over as equity valuations become less attractive and investors may shift into bonds.
The positive development on the stock market has so far been mainly driven by a few strong stocks, while second-tier stocks and conservative stocks are struggling to improve their performance. The Swiss stock market in particular is lagging behind, due to a variety of problems in heavyweights such as Nestlé and Roche, as well as the strong franc.
Experts such as Daniel Kalt, chief economist and head of investments at UBS in Switzerland, recommend shifting cash into bonds in a balanced portfolio, as these could fulfill their diversification purpose again in the event of a recession. It also makes sense to focus on quality stocks – especially companies with little debt and a high return on capital. This speaks again to the big American tech stocks, which have proven resilient.
Given these developments, it seems important for investors to adjust their portfolios accordingly and not rely solely on a Christmas rally, as uncertainties continue to exist in the stock markets.
Read the source article at www.nzz.ch