CMB: Valuation of US stocks is high, but leading tech stocks are expected to continue to drive investment sentiment in the short term
The Bank of East Asia's Economic Research and Investment Strategy Department released an investment hot spot analysis titled "Trump's Return to the White House Boosts US Stocks and Dollar", which pointed out that Trump defeated Harris and was re-elected as the President of the United States after four years. Although US stocks are overvalued, the strong or positive performance of leading technology companies in recent quarters is expected to continue to boost the investment sentiment in the short term, and the medium- and long-term benefits of interest rate cuts and artificial intelligence-related technology development are also expected. If the US job market remains robust, it will increase investors' confidence in a soft landing in the US economy and help US stocks continue to outperform other mature markets.In the short term, US bonds may be under pressure. Trump's expansionary fiscal policy may stimulate inflation and increase concerns about the US federal government's debt burden, which may even affect the Fed's interest rate cut prospects and lead to upward pressure on Treasury bond yields. The sovereign and investment-grade corporate bond views are temporarily lowered to neutral.The Bank of East Asia maintains a slightly positive view on US stocks and raises the US dollar index view to neutral/preferable. The market's expectations for the Fed's interest rate cut next year may be lowered, and Trump's proposed tariff increase may bring new shocks to international trade, which may put pressure on non-US currencies in the short term.