DWS: Expects the first rate cut in September to be cautious about the overall US market
DWS expects the US to cut interest rates for the first time in September, despite the Fed keeping rates unchanged at the end of July. The institution is cautious about the US market, pointing out a negative shift in sentiment towards large tech stocks and predicting continued market volatility. DWS is optimistic about Japanese stocks, seeing them as a high-quality alternative to Chinese stocks, and expects profit growth in European stocks to continue until 2024. Despite facing multiple risks, emerging markets, gold prices remain strong, demonstrating their safe-haven value
According to information obtained from the DWS app, DWS recently released its market outlook for August 2024. DWS expects the United States to cut interest rates for the first time in September. Although Federal Reserve Chairman Powell has acknowledged further progress towards achieving the 2% inflation target, the Fed maintained its policy rate unchanged at the end of July.
Recently, the US stock market has shown a negative sentiment towards the "Big Seven" tech stocks for the first time. There is a clear divergence in views on AI in the market, with questions arising about the potential return on investment in high-end AI. DWS continues to maintain a cautious stance on the overall US market. The sharp drop in the US stock market in early August is considered a reasonable adjustment, and the market may continue to fluctuate in the coming weeks. However, it is not believed that a bear market has arrived.
DWS points out that Japanese stocks are gradually becoming a quality alternative to Chinese stocks, with overseas investors significantly increasing their allocation to the Japanese market. Corporate governance reform and the improvement of shareholder returns are the main drivers of the Japanese market. It is recommended to take advantage of short-term weakness in individual stocks to establish long-term positions, while still maintaining a neutral deployment. In addition, the outlook for European companies is promising, with strong earnings momentum. European companies are expected to record profit growth for the fourth consecutive year in 2024. DWS currently maintains an "overweight" rating on European stocks.
DWS maintains a neutral stance on emerging market stocks. Overall, bearish factors are increasing, with some election results disappointing the market, the US dollar remaining strong, US interest rates staying at high levels, and geopolitical risks escalating, all posing challenges to emerging market equities.
DWS states that despite market volatility from late July to early August, the price of gold remains resilient, demonstrating the value of gold as a safe-haven investment. Gold still has the potential for further upside, especially in the short term, as uncertainties in the US economic development and future Fed rate policies continue to support gold prices. Additionally, the current trend in oil prices reflects a stable supply situation, with OPEC and Russia expected to implement long-term production increase plans. The current oil prices indicate very low risks of supply disruptions