US Stocks May Stumble After Rate Hike, But Global Markets See Upside

Citigroup strategists are warning that U.S. stocks may stumble after the Federal Reserve's first interest-rate hike, but they see potential upside for global cyclical stocks like financials and technology.

The bank's analysts, led by Beata Manthey, found that Japanese and European equities tend to outperform their U.S. counterparts in over 50% of cases after the Fed raises rates.

Specifically, Japanese and UK markets show better relative returns than US stocks, with average gains of around 3% for Japan and near 2% for both the UK and Australia.

In contrast, U.S. equities tend to underperform after the first rate hike, with a relative loss of almost 2%, according to Citigroup's analysis.