In a month where almost all benchmark stock indices and thematic indices have weakened, stagflation-themed trading is rising to prominence.
Stocks in the US and European markets that are more vulnerable to the risk of inflation, such as the consumer goods and real estate sector, are already under pressure, dragging down the S&P 500 index by more than 4% since April. Meanwhile, rising oil prices boosted energy stocks.
Despite the strong performance of the US economy over the past few months, forecasts indicate that GDP growth will slow starting in the second half of this year.
A Goldman Sachs Group index measures the performance of increasing stocks favorable to stagflation and shorting stocks that are bad for stagflation. The index has risen nearly 5% since the beginning of April, and is likely to record the biggest monthly increase in a year.
The top 10 longest stocks in the Goldman Sachs Index include Microsoft, Mastercard, and Caterpillar, and the short positions include Abercrombie & Fitch Co. , Super Micro Computer Inc. and KLA Corp. et al.
Given that facts have proven that the path to achieving a 2% inflation rate in the US is more bumpy than expected, prompting investors to retreat their expectations of interest rate cuts, the focus will eventually shift to the impact of economic growth prospects.