Irrespective of the Trade War Tensions, Stock Markets Remain Hopeful
Stock markets remain quite resilient even as headlines flash warnings about trade wars and possible recessions. Numerous Wall Street strategists are optimistic about the outlook for the United States equities and, therefore, choose to ignore the worries that characterize 2018.
Earlier this week, JPMorgan Chase & Co. analysts said that they were hopeful on the US stocks especially increased earnings, speeded buybacks as well as pro-business policies. DubravkoLakos-Bujas, the firm’s head of equity strategy, stated that the reduced taxes and fiscal stimulus were aiding in offsetting monetary headwinds. He also emphasized his target for the end of the year which is 3,000 for the S&P 500.
Andrew Adams, a Raymond James Strategist, said that 2018 was tough than 2017 but he was yet to see red flags that signal the ending of the bull market. He also urged investors to concentrate on the long-term uptrend.
On Friday, stocks rallied following reports that showed an increase of 213,000 jobs in the US job market. The report showed that the United States economy is still robust. Meanwhile, there has been a reduction in the wage inflation which helps to ease worries of an inflation that ids wage-driven.
The marketing world has been characterized by uncertainties as President Trump clashes with close trade partners of the US. The trade war between the US and China entered a new phase on Friday when Washington imposed new tariffs on Chinese goods worth$34 billion.
On Tuesday, FutchRatinfs indicated that the escalating tensions between the US and other trading partners could jeopardizeup to$2 trillion in global trade.However, some analysts think that the threats of a trade war are overshotparticularly due to economic expansion that aims at boosting corporate earnings.
According to John Butters, an analyst at FactSet, earnings are expected to begin in the coming week with banks, and, are projected to rise with more than 20 percent in the second quarter. Thus, if corporate results emerge as earlier projected, then the double-digit growth will have progressed to the third quarter consecutively.
Jeffrey Schulze of ClearBridge Investments asserts that the congressional mid-term elections approach provides more reasons for optimism. The performance of the stock markets is in tandem with the prior midterm elections. Schulze adds that the visibility of the midterm elections causes a rise in the markets.
However, analysts insist that they will be closely watching inflation data as well as the increasing costs of goods and services. Analysts at RBC Capital Markets, say that the tightlabor market should keep the inflation narrative alive.