JP Morgan AM expects two rate cuts in the eurozone and selects the US stock market as its preferred asset | Financial markets

Price resistance has accelerated the adjustment in interest rate expectations. After three months of surprises from U.S. inflation, investors are starting to consider the possibility that the Federal Reserve won’t cut rates. A day after Federal Reserve President Jerome Powell said it was appropriate to spend more time on contractionary policy, Lucia Gutierrez-Mellado, director of strategy for Spain and Portugal at JP Morgan AM, notes that her central scenario: that rates have peaked . That is, it rules out rate hikes in the coming months and delays the first cut until the latter part of the year.

The eurozone’s horizon appears clearer. After the first cut in June, the manager expects another cut in the second half of the year. That means just two cuts, a far cry from the six that managers expected at the end of 2023.

Although the U.S. economy has proven to be very resilient, Gutierrez-Mellado believes maintaining such resilience is difficult. The manager estimates a slowdown in growth from 3% at the latest data to 2%. Consumption, the main engine of the economy last year, will continue to support the growth cycle, but they expect spending to be less strong. A good macroeconomic outlook causes a manager to overweight the stock market relative to liquidity. Although valuations are very demanding, Gutierrez-Mellado believes that the US stock market has no competitors, while remaining neutral in relation to the European stock market. Increasing profits and economic power are the reasons that support this distribution. After 2023, when earnings growth was concentrated in technology, the company now expects that expansion to spread to other industries. “We expect more growth in the US than in Europe,” he notes.

As macroeconomic indicators show, the worst is behind us in the eurozone. The firm expects a recovery, although it won’t happen in V. The outlook is more challenging for China, where a property market recovery has yet to materialize and consumption continues to disappoint. That is, as with the market consensus, they find it difficult to achieve the 5% growth target announced by the Beijing government.

Rising geopolitical tensions and environmental concerns have brought raw materials into the spotlight. Gutierrez-Melado believes they represent an interesting asset because of the imbalance that continues to exist between supply and demand, as well as the weight they have in technological evolution and the transition to a more sustainable economy. Now that geopolitical tensions in the US have again raised concerns, the manager advises restraint and believes that, as seen in the markets, the risk is quite limited.

The manager believes that inflation, a big question for central banks and one of the main threats in the coming months, will continue to slow. Of course, the fall, he points out, will be slow and not straight. “There will be bumps in the road, as happened in the second quarter,” he noted.

Follow all the information Five days V Facebook, X And LinkedInor in our newsletter Five days program

_