Stocks injected with a shot of hope
Research Signals - November 2020
Encouraging vaccine news boosted equity markets worldwide, with many major regional indexes notching solid double-digit monthly gains. As investors looked beyond the virus on hopes of life returning to normal in the coming year, coupled with reduced uncertainty with the US election in the rear-view mirror, high risk and beaten-down value stocks that would benefit from economic growth outperformed (Table 1). Optimism for the economic recovery taking hold was buttressed by the J.P.Morgan Global Manufacturing PMI posting a 33-month high, furthered by firmer sentiment in future output on vaccine hopes.
- US: The high-risk trade was prominent in US markets, dragging down measures that favor lower risk, including 60-Month Beta and 24-Month Value at Risk
- Developed Europe: Traditional value measures of Book-to-Market led the expanded rotation to value stocks
- Developed Pacific: In markets outside Japan, 2-Year Ahead EPS Growth was highly rewarded, while Short Sentiment signals including Demand Supply Ratio and Implied Loan Rate outperformed in Japan
- Emerging markets: Investors favored undervalued and high-risk names, gauged by Book-to-Market and 60-Month Beta, respectively
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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.