SIACharts Logo

Commentary >

 Sector Scopes March 2021 & iShares US Home Construction ETF (ITB)

Some of the fear that gripped certain equity market sectors appears to have eased over the last few days. Although the rise in traded interest rates which rattled some traders earlier this month has continued, statements from central bankers in recent days have indicated that they expect inflation to remain contained, and their current stimulus programs to continue at current levels in North America and to increase in Europe.

Within equity markets, rotation continues with investors taking profits from sectors which had benefitted from the stay-at-home economy and redeploying the proceeds into sectors with the potential to catch up as economies reopen.

Yesterday’s Fed decision and projections can be seen as indicating a goldilocks economy ahead, strong enough to support corporate earnings growth but not strong enough to force the Fed to tighten any time soon. For example, Fed members average GDP forecast for 2021 increased to 6.5% from 4.2%, but the 2022 forecast only increased to 3.3% from 3.2%. Similarly, FOMC members now expect 2.4% inflation for this year, as commodity prices rebound, but for inflation to ease back to 2.0% next year. For interest rates, all 18 members expect no increases in 2021, 14 members expect no increase in 2022 and 11 members expect no increases in 2023.Central bank meetings continue to dominate the economic calendar, headlined by the Bank of England today, the Bank of Japan overnight tonight, and the Peoples Bank of China at the start of next week. Flash PMI numbers are due in the middle of next week. The earnings calendar is also really light following today’s reports from FedEx and Nike.

In this issue of Equity Leaders Weekly, we take a look at what the Sector Scopes feature in SIA Charts is telling us about investor confidence and capital rotation between equity market sectors, and at a recent breakout by the homebuilding sector.

Sector Scopes March 2021

Keep up to date on the latest financial market news.

Receive a daily newsletter with stock highlights, ETF rankings, weekly market focus and others.