Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

U.S. Tax Deadline May Keep Stocks, Cryptocurrencies Under Pressure in April - Citi

Published 03/29/2022, 06:38 PM
Updated 03/29/2022, 06:38 PM
© Reuters.

© Reuters.

Citi strategist Alexander Saunders has warned investors about returns from the US equity investments as the mid-April tax deadline approaches.

Saunders notes that US equity returns have traditionally been lackluster following strong up years, like 2021. This may not be the case with international stock markets, while it is yet to be seen how cryptocurrencies will behave during the first two weeks of April.

Our hypothesis is on years following strong market up moves, individuals are more likely to sell equities in advance of the mid-April payment date The 2020 COVID period was a clear outlier. Markets recovered strongly amid Fed support via QE and associated actions. If we exclude this data point the relationship is further strengthened (t-statistic -2.36 from -1.45), Saunders said in a client note.

Although the strategist acknowledges a relatively small sample size, he notes that historic returns are negative up until 2 days prior to the deadline day.

The strategist is also cautious on cryptocurrencies.

Performance of crypto markets going into the US tax season will be interesting. Increased adoption and regulatory awareness has also increased scrutiny. Some exchanges are issuing tax forms to US residents. This may lead to some selling pressure in the crypto space to fund any liabilities, Saunders added.

Despite these potential short-term bumps, Citis strategists remain cautiously optimistic on stocks over the medium term.

By Senad Karaahmetovic

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.