Branch2 Intelligence
The chip pullback is ushering in a bumpy market. These sectors are the best bets now, according to Morgan Stanley.
Key takeaway
Morgan Stanley warns the semiconductor trade is cooling, triggering a bumpy market rotation.
- Step 11st-order: Morgan Stanley's sector rotation call triggers selling in semiconductor stocks and buying in defensives.
- Step 22nd-order: Rotation out of growth stocks reduces risk appetite, widening credit spreads and lifting the US term premium.
- Step 33rd-order: Higher US term premium transmits to UK gilt yields via cointegrated long-rate markets, increasing SME financing costs.
Source: MarketWatch
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