The First Week Of A New Year, Traditionally Volatile In Market Indices


The first week of a new year is traditionally volatile, with a huge dispersion in the performance of the market indices. This can be seen clearly in the first 5 sessions of the Ibex 35 over the last few years: 2010 + 1.87 % ; 2011 – 3.03 % ; 2012 – 3.24 % ; 2013 + 3.50 % ; 2014 + 3.4 % ; 2015 – 1.6 % and in 2016 – 6.65 %. Independently of this very short-term positioning, Bankinter believes that 2017 will be the year for equities.

In  its 2017 strategy report, it provides the following targets for the indices for this year: Ibex 10.202 (10.9% potential upside), Eurostoxx-50 3.710 (12.74 % potential upside), S&P 500 2.639 (17.87 % potential upside) and the Nikkei 20.803 (+ 8.83 % potential upside).

At the same time, Bankinter analysts emphasise that these valuations are more likely to be revised upwards than downwards as the year progresses, depending on EPS performance. “Positive surprises definitely cannot be ruled out. Moving down a scale within a top down perspective, we still prefer sectors like industrials, banks and technology at the expense of utilities, low beta stocks with a high dividend, defensives. We think their time has past in stock market terms.”

As far as fixed income is concerned , these experts continue to insist on and warn about the risk in buying bonds. Their yields clearly do not justify the investment (Bund tir +0.20%). And if there is another steepening of the curve, underlying assets (bonds/funds) in the mid and long-range of the curve will once again register negative yields.