Covid vaccine & rotation out of growth
Casting our minds back, early November was when vaccine news really picked up. Strong covid vaccine efficacy results and safety records meant that the end to the pandemic suddenly became a very real possibility. As the prospect of economies reopening has increased, stocks more closely tied to economic performance have become increasingly more in demand.
A rotation out of growth stocks and into value was clear with the Dow Jones index surging 11% across the month of November, whilst FAANGs gained a more subdued 5% on average.
Yet with the prospect of economies reopening and growth picking up, value stocks will look more attractive next to their big tech peers. The rally has started to broaden out with down beaten financials and energy stocks gaining the most since November whilst the FAANGs lagged. This trend is expected to continue.
It is also worth noting divergences that are appearing with the FAANG group and this will be a key theme to watch across the coming year.
These figures show that advertising tech – those which make the majority of revenue through advertising didn’t perform so well.
Looking ahead the continued fracturing of the FAANGs group is likely, with the most bullish forecasts reserved for Apple and Amazon, whilst optimism surrounding Facebook is fading.