Global equities plummeted Monday, with Japan’s Nikkei and Topix each dropping 12%, pushing the latter into bear market territory. The U.S. market also suffered, with the S&P 500 falling 3% to its lowest closing price since May, driven by disappointing economic data and a weak jobs report.
Market Reactions Citi strategists noted, “The markets now seem to believe that high rates and strong growth cannot coexist indefinitely.” This has led to aggressive repricing of Federal Reserve policy, with expectations of consecutive 50 basis points rate cuts in September and November.
Defensive Strategies Citi’s Bear Market Checklist suggests buying into market weakness, but strategists recommend waiting for further positioning unwind and stabilization in earnings momentum. They have upgraded the U.S. to Overweight and the UK to Neutral, focusing on Communication Services and Consumer Staples.
