Cross Asset and Relative Monthly US Sectors (Apr ’17) – Financials Under Pressure

We have updated our monthly publication – US Sectors Relative to S&P500.

It is an overview of the major US sectors, and covers, amongst others, Consumer Discretionary, Consumer Staples, Energy, Healthcare, Technology and Financials.

Within several ratings changes, we have Downgraded Financials to Underweight.
Financials Sector showing signs of weaknessOn an absolute basis, the US Financials Sector is showing signs of exhaustion. Prices are correcting back from the March highs, just shy of 550, with focus now on the 486/487 break level from November/December. Falling momentum studies suggest risk of a break beneath here, with subsequent focus then turning to congestion around 450.






Financials Sector remains under pressureRelative to the US S&P500 Index, price action is also looking vulnerable.
In the coming months, we see further Underperformance as institutional investors reduce exposure.







JP Morgan underperforming Financials sectorIndividual names which are currently under pressure include Bank of America Corp (BAC), Citigroup Inc (C), Goldman Sachs Group (GS), JP Morgan & Chase Co (JPM), Morgan Stanley (MS) and Wells Fargo (WFC).
However, several names are managing to hold on to their relative strength. Investors who are maintaining a Financials portfolio are currently seeing safety in for example, American Express Co (AXP), BlackRock (BLK), Berkshire Hathaway (BRK), Moody’s Corp (MCO) and Prudential Financial (PRU).

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