With the United States 2020 presidential election fueling the uncertainty in the global business environment, Citi Group forecasted further boost in the stock market towards the end of 2019.
The yearly objective for the benchmark S&P 500 index was forecasted at 3,050 at the start of 2019. In a previous estimate, Citi Group had upgraded its expectations to 3,300. In light of the 5% gain in the index in the past 3 months, however, the investment bank has further increased its estimated target for the S&P 500 to 3,375. The S&P 500 index has printed an over 25% gain in 2019 so far.
S&P 500 Index Closed The Last Week On A Positive Note
The S&P 500 index was weighed down at the start of the last week. As of Friday, however, the largely positive U.S jobs report fueled another hike that saw the index close at 3,145.91 for the week. Against the analysts’ estimate of 187,000 new jobs in November, the report highlighted the economy to have added 266,000 jobs instead that helped remove the weekly losses for the index. At 3.5%, the unemployment rate also marked the lowest level in over 5 decades that further supported the index to remain green.
In its recent estimate, Citi Group stated that a bull run to 3,500 level in the S&P 500 can also be expected in 2020’s first half. The improvement in global industrial conditions and increasing stability in the U.S economy as depicted in the data, were cited as the reasons for the upbeat forecast. The bank also expects the U.S dollar to lose strength ahead of the presidential election that can manifest in the form of rising interest in emerging markets.
Democrats Victory In The 2020 Presidential Election Can Dramatically Change The Outlook
The investment bank, however, recommended caution to the investors as the U.S 2020 presidential election continue to boost uncertainty. In an event that Democrats win the upcoming election, the bank added, stricter regulations for businesses and higher taxes can dramatically change the outlook. Upon Trump’s victory, the stock market may still be unpredictable due to an increased risk regarding global order, diplomatic relations, and trade policy.
Based on the yield curve, contraction in profit margins, and increasing unemployment rates, Citi Group anticipated the 2020’s second half to pose a greater challenge for the U.S economy. In the macroeconomic background, the investment group remarked, the ongoing U.S – China trade complications may be stretched to over a decade even if the phase 1 deal is signed in the near future, seeking increased caution for the investors in the long run.