Q4 2021 Global Markets Outlook - the final leg of the secular bull market for equities?

As we head into the final three months of 2021, our Q3 preferred theme play for global equities; high quality technology outperformance with cyclicals/value underperformance has been unfolding as expected so far. On the aggregate, the US S&P Technology  sector together with US Big Tech (F.A.A.N.G + Microsoft) have rallied by 6% and 4.5% respectively from the start of Q3 till 26 August.

On the other hand, the average return over the same period for S&P Financials, Materials, Industrials and Energy sectors was almost unchanged at -0.25%, dragged down by a -10.8% loss seen in energy stocks. Hence, technology stocks have so far been the main driver to power up the US benchmark stock indices; the S&P 500 , Nasdaq 100 and Dow Jones Industrial Average with the exception of the small-cap Russell 2000 to another round of  fresh all-time highs recorded in August.

On the other end of the spectrum, China Big Tech such as Tencent, Alibaba, Baidu, JD.com, Meituan and NetEase have continued to bleed as their business operations have been hampered a continuous spiral of regulations imposed by the China government. All in all, the share prices of China Big Tech have tumbled by close to -50% from their recent respective February peaks and wiped out close to around $1 trillion in combined market capitalisation.

On the economic front, “peak growth” narrative has been intensified where global manufacturing activities have slowed down with less buoyant business and consumer sentiment coupled with the rise of a more transmissible Covid-19 delta variant.

Also, supply chain disruptions continue to persist that may led to a sticky heightened inflationary environment rather than transitory. In addition, several US central bank officials have started to adopt a more hawkish stance to take away the punch bowl of an ultra-accommodating monetary policy that has been adopted by the Fed for close to a decade. The first step is to taper its bond buying programme before 2021 ends follow by a kick start to its key policy interest rate hiking cycle in 2022. Overall, lots of red flags have appeared that may reverse the secular bullish trend of global equites in general which has lasted for 12 years.

Join us in a live webinar where CMC Markets Market Analyst, Kelvin Wong will explore what are the equities theme plays that can outperform potentially in Q4 with key technical analysis related charts.

Also, we will covering the following key points as well:

• Have China Big Tech stocks form a major bottom after six month of decline ?
• Can the US dollar stage a bullish breakout from its current 8-months of sideways range?
• Is the recent recovery seen in Bitcoin and Ethereum a dead cat bounce or the start of a new bull run?  
• Outlook on Gold and WTI Crude Oil.

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