Citigroup upgrades Japanese stocks to ‘neutral’ and cuts UK stocks to ‘underweight’

Oct 6 (Reuters) – Citigroup on Friday raised its rating on Japanese shares to “neutral” as the country’s economy and earnings appear resilient, but downgraded British shares to “underweight” due to high exposure to fluctuations in oil prices.

The Wall Street brokerage also downgraded its rating for the global energy sector to “underweight” due to the bearish outlook for the oil sector.

He said that if hopes of a “soft landing” in the United States prevail, cyclical stocks should outperform, and cyclical markets like Japan would also benefit.

While Citi maintained a 1% contraction forecast for global profit growth this year, the brokerage said it expects profits to grow 9% in 2024.

“Global economic risks overall appear more balanced, although downside risks remain,” Citigroup equity strategists said in a note.

“Our forecasts imply a ‘slowdown’ in earnings per share (EPS) this year, rather than a full-blown recession. A shallow earnings contraction is more conducive to cyclical outperformance,” they added.

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