LIVE MARKETS-Buybacks to the rescue?

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BUYBACKS TO THE RESCUE?

After reaching a new record high last month, the S&P 500 .SPX has retreated over 6% on concerns that Trump's policies could lead to a recession.

Yet Citi believes any further weakness might be offset as companies deploy cash to buybacks rather than capex.

Trump over the weekend refused to say whether his trade policies, particularly tariffs, will cause a recession.

"Unintended consequences of policy decisions will be an ongoing issue for all market participants to navigate at the single stock/sector and index level," Citi notes.

Should the S&P 500 drop to a level approaching 5,500, indicating a 10% fall from the peak, Citi thinks there could be a buying opportunity.

"This is a level at which our conviction in putting new money to work gets higher," they write.

The S&P 500 closed Friday at around 5,770.

U.S. stock futures EScv1 are down about another 1% on Monday and showing little sign of stabilising.

Yet cash flow generation is set for "solid growth" this year, according to Citi, and should markets fall further, they believe companies could reallocate cash to buybacks rather than capex.

"Should large cap U.S. equities continue to correct, we expect that share repurchase activity would increase, thus providing some level of support to stock prices," they say.

(Samuel Indyk)

EARLIER ON LIVE MARKETS:

"EUROZONE SHORT TERM LOOKS OVERBOUGHT" CLICK HERE

VOLATILITY STAYS HIGH, STOXX DIPS CLICK HERE

BEFORE THE BELL: EUROPEAN FUTURES BOUNCE BACK CLICK HERE

TRUMP'S TARIFFS RAISE RECESSION RED FLAGS CLICK HERE