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Monthly Market Snapshot: January 2021

Highlights

Financial markets are off to a bumpy start in early 2021 with stocks drifting lower across several regions. The MSCI All Country World Index, a broad measure of stocks globally, fell by 0.5% in January. However, this comes after a 17.3% rally in November and December. In the United States, the S&P 500 slipped 1.1% while the Dow Jones tumbled 2.0%. The tech-heavy NASDAQ bucked the trend and rose by 1.4%. Over the month, the 10-year U.S. Treasury yield jumped 15 basis points to 1.07% on expectations for more fiscal spending.

After such strong returns in 2020 it would not be surprising to see a period of market consolidation ahead. However, we remain confident that this is just the beginning of lasting global economic expansion and that corporate earnings will rebound materially over the next couple of years. This should support equities.

Citi Private Bank’s Global Investment Committee (GIC) shifted from an overweight on U.S. small- and mid-capitalization stocks and North Asia’s emerging markets (including China) to a neutral position. As a partial offset, the GIC added an overweight position on the global healthcare sector which has much better valuations relative to other sectors and stable growth fundamentals.