Is The Stock Market Will See New High in The End of 2020?
(Wed, 17 June 2020). It`s an overvalued market that`s flush with cash, thanks to the Fed. High profile analysts are convinced that the U.S. stock market is on track to see an all-time high by the end of 2020.
The U.S. stock market is on track to see an all-time high by the end of 2020. Strategists including Bianco Research President James Bianco say it’s foolish to ignore the Fed’s actions. Morgan Stanley predicts Asia’s economy to recover, as global economic sentiment rises. High profile analysts are convinced that the U.S. stock market is on track to see an all-time high by the end of 2020.
The central factor of newfound optimism around equities is stimulus effort by the Federal Reserve. Bianco Research President James Bianco said it’s “foolish” to ignore the Fed’s effect on the stock market.
Predictions on a sustained uptrend in the U.S. stock market follow Wall Street heavyweights like Paul Tudor Jones admitting the recent market trend has humbled them.
What’s Next For The Stock Market In The Near-Term?
The U.S. stock market is under immense pressure from various geopolitical risks and economic consequences from the pandemic. South Korea, a close ally of the U.S., is on the verge of military confrontation with North Korea. Meanwhile, the relationship between the U.S. and China has not improved.
Fears of a second wave of the pandemic will restrict international supply chains, creating a challenging environment for both small and large businesses. Yet, the U.S. stock market is rising solely because of the aggressive policy of the Federal Reserve.
The Fed has pumped significant liquidity into the market since March and vowed to do the same in the foreseeable future. Bearish investors fear that if the Fed slows down its efforts, the entire stock market could react fiercely to it. Bulls seemingly believe that the Fed has no incentive of pulling back from fueling the momentum of equities.
For buyers, the Fed’s unexpected decision to start purchasing corporate bonds was all they needed to hear.
Sentiment Around Asia’s Economy Is Also Bright
According to Morgan Stanley managing director Deyi Tan, Asia’s economic trend is also optimistic despite concerns of the pandemic expanding in the second half of 2020. Tan emphasized that central banks and policymakers have a better idea to deal with an economic downturn in the short-term.
For that reason, Tan noted that Morgan Stanley does not expect the economy of Asia to “double-dip,” or drop again after an initial correction. Even if it does go through a double-dip, the economist said it is not necessarily a negative trend. Major stock market indices in Asia, such as Nikkei 225, SSE Composite, and Kospi, have recovered since May following the lead of the U.S. stock market.
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