DWS: We are cautious on the US market as a whole as we expect the Fed to cut rates in September for the first time.
WeChat Next Finance learned that DWS released the August 2024 market outlook recently. DWS expects the Fed to cut interest rates for the first time in September, despite Fed Chair Powell acknowledging further progress on the path to the 2% inflation target. The Fed kept the policy rate unchanged at its meeting in late July.
The market recently showed a more negative sentiment towards the "Big Seven" large-cap tech stocks for the first time, and the market's view on AI has become significantly divergent, raising doubts about the potential return on investment in high-class AI. DWS remains cautious on the US market as a whole. The recent sharp drop in the US stock market is largely a reasonable adjustment, and the market may continue to be volatile in the coming weeks. However, it does not believe that a bear market has arrived.
DWS points out that the Japanese stock market is gradually becoming a high-quality alternative to US stocks, and overseas investors have significantly increased their allocation to the Japanese market. Corporate governance reform and the improvement of shareholder returns have become the main driving forces for the Japanese market. It is suggested to take advantage of the short-term weakness of individual stocks to establish long-term positions, but still maintain a neutral position. In addition, the prospects for European companies are not optimistic, and the earnings potential of European companies is strong, and European companies are expected to record their fourth consecutive year of earnings growth in 2024. DWS currently maintains a "hold" rating on European stocks.
DWS maintains a neutral stance on emerging market stocks. In general, the factors that favor and those that are unfavorable are increasing, and some election results have disappointed the market, the strong dollar and the high level of interest rates maintained by the Fed, as well as the resurgence of geopolitical risks, all of which are unfavorable to emerging market stocks.
DWS says that the market was volatile from the end of July to the beginning of August, but the gold price remained strong, fully demonstrating the value of gold as a safe-haven investment. The gold price still has the potential to rise further, especially in the short term, as the uncertainty of the US economic development and the future interest rate policy of the Fed will continue to support the gold price. In addition, the current oil price trend reflects a robust supply situation, and OPEC and Russia are expected to implement a long-term production expansion plan, while the current oil price reflects a very low risk of supply disruption.