The big financials difference: Eye on the World 06/08/20

Markets moved higher yesterday, led by cyclicals, on US fiscal stimulus outlook as further evidence of stalling US labor market and Fed commentary put more pressure on Congress for a deal. We see a cUS$2trn positive outcome.

HOT TOPICS analyses the dramatic divergence between DM and EM Financials. We expect developed markets financials to lag a cyclical recovery on bond yield and capital headwinds, but EM’s largest sector looks better placed, with cheap valuations, higher profitability, and GDP recovery leverage.

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