JPMorgan Chase and Bank of America say that the restoration of the US stock market will probably be of short duration.
The JPMorgan trade team is of the opinion that the US stock market has a little more upward potential in the short term in the midst of the de-escalation of President Trump’s trade war, report Bloomberg.
But the company warns that the true impact of Trump’s rates on the economy still have to be felt, so that the team believes that the market is not yet over the bump.
“The combination of light positioning, low liquidity, modest investors participation means that this market will probably float higher without negative news, such as tariff heads or a peak in bond returns …
[However,] This is not entirely clear for markets …
We are still 1-2 months old from seeing the negative impact of the trade war on the real economy. “
The Equity research team of the bank shares a similar sentiment and notes that it “has a bias to sell risk assets on strength instead of having to chase the momentum as a complete shift in the story, further newspaper headlines will be deleted.”
Meanwhile, Bank of America’s team of market strategists out The recovery is probably not sustainable and advises customers to “sell in rallies in US shares and the dollars.”
The bank also says that the Basement of the US Dollar is the “cleanest investment theme to play”.
According to Bofa, a deprivating dollar is a strong signal that investors all over the world move capital away from American assets.
“Weaker American dollars will slowly play with lower yields or quickly with higher yields. It is brutally marked by the rising golden prize.”
Bofa is of the opinion that the capital flight from the American assets will continue, unless the Federal Reserve lowers the rates, Trump lowers a trade agreement with China and consumer expenditure remains strong.
The bank also emphasizes that a weak US dollar suggests that investors re -assign the capital in raw materials such as gold and foreign stock markets.
The US Dollar Index (DXY), which measures the strength of the USD against a basket with other large foreign currency, will fall by around 8%this year, after witnessing the deepest slide in 16 years last month.
In the meantime, the S&P 500 has risen around 15% since the 2025 lows of 4,835 points, which it achieved on 7 April.
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