Morgan Stanley: Weaker Dollar to Boost U.S. Stocks
In contrast, JPMorgan Chase & Co. favors international stocks over U.S. equities in their latest note to investors.
Quick overview
- Morgan Stanley believes a weakening dollar will enhance U.S. corporate earnings, leading to better performance in the American stock market compared to global markets.
- Michael Wilson from Morgan Stanley predicts the S&P 500 will range between 5,000 and 5,500 points, contingent on several economic conditions being met.
- In contrast, JPMorgan's Mislav Matejka prefers international stocks, citing a more favorable risk-reward profile amid potential tariff rollbacks and recession risks.
- Other strategists, including those from Bank of America, recommend selling U.S. stocks, suggesting that current conditions do not support sustained gains.
Morgan Stanley stated that a weakening dollar will support the earnings of U.S. companies, helping the American stock market outperform the rest of the world.
Michael Wilson of Morgan Stanley emphasized that betting on the U.S. remains a viable option. He cited the relatively stable earnings growth and the perception of U.S. companies as higher-quality businesses.
Wilson expects the S&P 500 to stay within a range of 5,000 to 5,500 points. For a more substantial rally, he noted, several conditions would need to be met: a tariff agreement with China, a clear rebound in earnings estimates, and the prospect of a more accommodative monetary policy from the Federal Reserve.
The Morgan Stanley strategist reiterated that the weaker dollar should bolster U.S. corporate earnings, strengthening the U.S. equity market relative to global peers.
Diverging Views
In contrast, Mislav Matejka of JPMorgan Chase & Co. favors international stocks over U.S. equities. In his latest note, he argued that the risk-reward profile is currently better for non-U.S. stocks, especially if former President Donald Trump continues to roll back tariff policies and recession risks remain elevated.
Matejka is not alone in his cautious stance on U.S. equities. Alain Bokobza, head of asset allocation at Societe Generale SA, warned that investors are likely to continue reducing their exposure to U.S. stocks and the dollar if Trump persists with his trade agenda.
Last week, strategists at Bank of America Corp. also advised selling U.S. stocks and taking advantage of dollar strength, arguing that the conditions needed to sustain gains are not currently in place.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
Related Articles
Comments
Sidebar rates
Join 350 000+ traders receiving Free Trading Signals
Alerts
Rates
Calendar
Signals