AI, copper, finance: Citi suggested assets to invest before the holidays

Citi Research's global macroeconomic strategy team shared insights with investors on which assets to buy before the holiday season. Citi's report was outlined by MarketWatch.

Among the key insights from Dirk Wheeler, head of global macro strategy and asset allocation at Citi, and his team is betting on continued growth in artificial intelligence-related stocks from the Nasdaq-100 index. Citi recommends investors buy call options, which give the right to buy fixed-price assets above the current price, on the index, exercisable in December 2026.

As long as capital investment by companies continues to grow and liquidity in the financial system remains high, there is still plenty of time for investors to capitalize on the burgeoning bubble around AI, Citi believes.

"The big sector rotation happens after the peak of the bubble, not before it. While [portfolio] diversification will still be useful next year, the technology sector should remain among the long positions," the bank's analysts said.

Wheeler and his team believe cyclical sectors, including financials, will continue to thrive in 2026, along with technology. This is not so much a rotation as an expansion of the bull market, which will enter its fourth year in 2026, Citi explains.

The bank believes that the financial sector will yield higher returns than the consumer staples sector from the so-called protective segment.

"Cyclical companies can perform well in a reflationary economy," the analysts said, referring to rising inflation while economic growth accelerates.

Long positions in copper will help capitalize on the acceleration of global GDP growth in 2026, Citi analysts also believe, saying it is an "all-weather" idea that is less dependent on the situation in the United States. Investors can buy copper futures, call options or funds tracking the metal, they argue.

Investment Bank warns: historically, both stocks and bonds perform poorly in US midterm election years (congressional and gubernatorial elections in a number of states) - especially in the third quarter, and especially if the ruling party retains control.

In addition, the investment bank suggested betting on the growth of AI stocks while taking a short position against bonds issued by AI companies.

Citi analysts, in addition to recommending investors, also shared their forecast on the future actions of the US Federal Reserve. They consider it unlikely that the next head of the Fed, whom President Trump will choose to replace Jerome Powell, will jeopardize the independence of the central bank. Nevertheless, the regulator is expected to continue cutting rates: this is likely to "overheat" the economy in 2026 and increase inflationary pressures. As a result, investors may demand a higher risk premium when buying long-term US bonds, putting pressure on their prices, Citi warned. And bond yields depend on price: the lower the value of the securities, the higher the yield.

This article was AI-translated and verified by a human editor