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Cyclical Sectors Resilient in Recent Sell-Off

19 February 2018Sectors
Hold on to Investments in Cyclical Sectors in the middle of Recent Sell-Off - Citibank UK
  • The performance of the various sectors in the recent sell-off suggests that investors are worried about interest rates and not economic growth. Click to know what the experts at Citibank UK have to say about cyclical sectors amid the recent sell-off such as Technology, Healthcare, Consumer Discretionary and more.
  • Rather, investors appear to be repositioning for higher US rates. The growth-oriented Technology and Health Care sectors initially sold off the most, along with energy sector, although the technology has since rebounded.
  • The energy sector experienced the biggest pull-back over the past week, despite the sector enjoying strong upward earnings revisions of late.
  • Within the cyclical sectors, the Consumer Discretionary sector which is a beneficiary of wage rises has been one of the most resilient sectors.
  • Since the S&P 500's peak on 26th January and on a year to date basis, the cyclical sector has still outperformed the defensive sectors. See chart.


    Cyclical sectors have outperformed defensives

    Cyclical Sectors Resilient in Recent Sell-Off

    Cyclicals includes Consumer Discretionary, Materials, Technology and Industrials. Defensives includes Utilities, Telecoms, Health Care and Consumer Staples. Source: Citi Research. As of 12 February 2018.

  • Citi Analysts believe that another year of synchronised global economic and earnings growth is likely to favour cyclical sectors as rising bond yields are usually a drag on defensive sectors.

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