The reflation trade that began before Donald Trump was elected U.S. president will end in 2Q as global
equities enter a correction, Saxo Bank head of equity strategy Peter Garnry writes in note.
Technology stocks will continue to do well because “it’s the only sure way of getting a growth component into the equity portfolio”.
The fading reflation trade will likely lead to an underperformance of financials and stronger performance among consumer stocks.
The real estate sector could outperform as inflation and macro data disappoint, dampening the outlook for higher rates.
Global energy sector has an “unsustainable” capital structure given the current oil price outlook; debt
restructuring is the only way to restore balance.
If Emmanuel Macron wins the French presidential election, French equities will outperform in 2Q against other European equity markets.
source: Bloomberg
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