JPMorgan: Weaker Dollar Will Benefit Global Stock Markets, Not Weigh on Risk Assets

Odaily News JPMorgan analysts believe that although investors are concerned that exchange rate fluctuations may impact the stock market, a weaker dollar should support stock markets rather than harm them.

JPMorgan pointed out that despite recent volatility in commodities, bonds, and crowded trades, the momentum of economic growth remains solid. Federal Reserve federal funds rate futures are currently pricing in approximately 55 basis points of rate cuts by year-end, providing a supportive backdrop for risk assets. JPMorgan holds a bearish view on the US dollar, with historical data showing that a weaker dollar is typically consistent with stronger stock market performance, especially in emerging markets.

JPMorgan maintains a positive outlook on emerging markets and commodity stocks and advises investors to buy metal assets on dips. In the European market, although a stronger euro may affect the translation of approximately 25% of US dollar-denominated revenue, strong growth during periods of euro appreciation usually offsets this adverse effect, and cyclical sectors typically rise alongside the euro.