Triple Momentum is strongest for Financials and Tech: BofA

Bank of America (BofA) analysts identified the Financials and Technology sectors as the strongest performers in their latest Triple Momentum analysis note this week.

The investment bank's analysis, which evaluates earnings, price, and news momentum, shows that Financials, particularly in the Insurance and Banks sectors, along with Tech Hardware, are leading the way globally.

According to BofA, "Triple Momentum is strongest for Financials and Tech." The firm highlighted the positive signals across these sectors.

They noted that the global equity markets have been buoyed by a combination of cooler-than-expected inflation and stronger economic data, leading to a rally in various regions, including the USA and Japan.

Meanwhile, BofA says the Financials sector, driven by strong performances in global Insurance and Banks, has shown the most robust momentum.

The Tech Hardware sector is also said to be thriving, with semiconductors seeing a significant bounce of +12.5% last week.

BofA’s broader analysis points to improving global earnings sentiment, as evidenced by the rise in the Global Earnings Revision Ratio from 0.93 to 0.94. This improvement was particularly noticeable in the U.S. and Japan, with the global Risk style ratio reaching a 33-month high.

Despite some negative signals from their Tactical Indicators, BofA says that several components have strengthened, including copper prices, credit spreads, and the VIX , indicating a more favorable environment for equities as the year progresses.

In contrast, Consumer Staples, Real Estate, and Materials sectors have shown weaker momentum, according to BofA's note.

As global markets continue to react to economic data and potential rate cuts, the Financials and Technology sectors appear well-positioned for further growth.

Source: Investing.com