Cyclical sectors lead the global equity market recovery

Vrasidas Neofytou
Head of Investment Research

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History repeats itself as the economically cyclical sectors have led global markets in each of the recent financial recessions, including the market’s recovery from the Covid economic recession.

Cyclical stocks are companies whose underlying business tends to follow the economic cycle of growth and recession.

The Dow Jones Industrial Average and the broad-based S&P 500 have hit fresh record highs as the hopes for a global economic reopening has increased the appetite for cyclical and value stocks among investors.

Reopening sectors such as finance, energy, retail, industrial, and travel have outperformed the growth sectors in 2021, as the successful vaccination programs are bringing the world closer to a fully reopened economy.

Large financial institutions including insurance companies, retail, and investment banks have posted a strong rally over the last months, as the rising interest rates are positive for their profit margins.

The travel industry which includes airlines, cruise, and hotel operators is trading near 1 year high as the demand for travel and entertainment trips is rising over the next quarters.

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