Equities: Risk-on tone persists with yields reversing – Danske Bank

Danske Research Team notes that equities rose 1.1% in Europe in thin holiday trading, with cyclicals, small caps and growth outperforming. They attribute the risk-on tone partly to peace talks and Oil prices, but also to a reversal in long-end yields that began last week. US futures point to further gains, while Asian markets, led by Kospi, are also higher.

Cyclicals, small caps and growth outperform

"Equities were higher on Monday in thin trading, as US and many other markets were closed for holiday."

"European equities closed a full 1.1% higher."

"It was a risk-on session in every angle; cyclicals beat defensives."

"Small caps beat large caps. Growth beat value. Peace talks and oil prices were some of the catalysts."

"However, it those were not the only factors driving equities higher."

"It is also the reversal in long end yields that begun already last week."

"US futures indicate an opening around 0.7% and Asia is generally higher. Kospi is the standout, with SK Hynix and Samsung rebounding 7% and 3%, respectively following last week's brief pause to the semi trade."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)