(Reuters) – HSBC lowered the note of American actions on Monday, citing uncertainty around customs duties, while reconnecting with optimism on European actions with regard to the probable German budget impulse.
The bank lowered the note of American actions to “neutral” and noted that of European actions, excluding British actions, to “under-ponder” to “overlap”.
Investors turn away from the United States with the Trump administration measures, including trade, for the benefit of Europe, carried by a major budgetary expenditure project in Germany and at European level to support the defense sector. The emergence of China as a leader in the technological race also rebates cards, noted the bank.
The S&P 500 index fell by about 6.1% compared to its February 19 record, due to the fears that the trade war does not affect businesses and slows growth.
“It is important to emphasize that we are not becoming negative on American actions. But, tactically, we see better opportunities elsewhere at the moment,” said Alastair Pinder, strategist in global actions at HSBC.
Michael Wilson, actions strategist at Morgan Stanley, thinks that the S&P 500 could still fall by 5% to reach 5,500 points by the middle of the year, before finishing the year at around 6,500 points, which represents an increase of 12.7% compared to the last fence of the reference index.
“The trajectory will probably be volatile, as the market continues to envisage the risks of growth, which could worsen before improving,” added the analyst in a note published on Monday.
(written by Kanchana Chakravarty and Medha Singh in Bengaluru; Bertrand de Meyer, edited by Sophie Louet)
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