Leading investment bank says US shares could fall 10%, something that could have serious implications for the ASX 200 index


A team of analysts at Citigroup has raised its target level for the S&P 500 for the end of this year. Despite the lift, however, the investment bank’s new estimate is nearly 10% below the current level of the benchmark US stock index.

Citigroup upped its estimate to 2,900 from the previous 2,700. The analysts believe that ‘powerful fiscal and monetary stimuli’ that will likely soon rain onto the market justify a bump in its target.

They still feel, however, that the stock market in general and the S&P 500 specifically are in for a tough time in the second half of this year.

Bumpy ride

The old saying goes that if US markets sneeze, the ASX catches a cold. With the S&P/ASX 200 Index (ASX: XJO) riding high at close to 6,000 – up more than 30% since its lows in March this year – if Citigroup is close to being right, the Australian share market could be in for a bumpy ride in the rest of 2020.

Citigroup’s chief US equity strategist, Tobias Levkovich, warned they ‘envision volatility for equities’ saying that good news is being priced into the markets and ‘problems are being overlooked’.

Prominent among these difficulties is, of course, the resurgent coronavirus outbreak, both in the US and here in Melbourne. With cases again rising sharply in many locations, and businesses reclosing (either by mandate or voluntarily), overall economic activity is set to constrict between now and the end of the year.

For the S&P 500 to rise substantially, Levkovich said that corporate earnings have to rebound ‘in a very meaningful way’.

That’s not going to be easy, since – despite employee layoffs and furloughs – many companies have been stuck with significant fixed costs against sudden drops in revenue.

The post Leading investment bank says US shares could fall 10%, something that could have serious implications for the ASX 200 index appeared first on Motley Fool Australia.

5 stocks under $5

We hear it over and over from investors, “I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!” And it’s true.

And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

*Extreme Opportunities returns as of June 5th 2020

More reading

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020


Here’s how you can strike it rich in the share market…

The best way to strike it rich in the share market is to buy shares that are not only cheap, but growing quickly.

Combining countless hours of research with over 30 years of hands-on stock market investing experience, The Capital Club’s founder Bruce Jackson has just published his definitive list of 3 Cheap and Good ASX Stocks for 2018.

Best of all, the report is absolutely free, exclusively for readers of The Capital Club.

In this comprehensive free report, you’ll find the name of one ASX gold stock that’s not only profitable, but trading at less than 4 times forecast profits.

You’ll also discover the name of a company one fund manager has called the cheapest stock in the ASX 100, and you’ll read about the three catalysts that could push the share price higher in the next six months.

Finally, the report names one of the cheapest retailers trading on the ASX, a company that just picked up the assets of a distressed competitor on the cheap, paying just 2 times earnings. No wonder one top fund manager thinks its share price could at least double.

With the share prices of each of these 3 companies having the potential to double or more, you’ll want to act now. Simply click here or the button below, enter your email address, and this free report will be instantly sent to you.

See the 3 stocks