US equities: what to pick up now?


The current bout of weakness presents an opportunity for investors to gain exposure to sectors which we favour in the US
Chief Investment Office15 Feb 2018
  • Range trading for now but accumulate for resumption of bull trend
  • Sectoral price action suggests that US portfolio allocators continue to position for growth
  • Our 1Q18 US sector Overweight calls has outperformed the Underweight calls
  • Stay the course: Overweight US Financials, Technology, Consumer Discretionary, and Industrials
Photo credit: AFP Photo


US equities have largely stabilised after the recent mid-cycle correction. Last night’s (14 February) inflation data was the perfect litmus test, in our view, to gauge if the recent market rebound will hold. As it turned out, both US headline and “core” inflation (at +2.1% y/y and +1.8% y/y, respectively) exceeded consensus forecast, sending the US Treasury (UST) 10-year yield higher to 2.9022%. The latest inflation print drove home concerns that the US Federal Reserve may hike its policy rates four times instead of three in 2018. But despite the panic in fixed income markets, US equities managed to continue its up-trend and gained another 1.34% overnight. As we have recently highlighted in “CIO Perspectives – Window to start accumulating”, the current bout of weakness presents an opportunity for investors to gain exposure to sectors which we favour in the US.

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