Jefferies: The "highlights" of the US stock market are over, and it may continue to decline in the future
Jefferies Global Equity Strategist Christopher Wood stated that the U.S. stock market has passed its "golden period," and investors should prepare for further declines in U.S. stocks, U.S. bonds, and the dollar. He believes that the market capitalization of U.S. stocks has peaked and recommends increasing allocations to assets in China, India, and Europe. Wood pointed out that U.S. stock valuations are at extreme levels and do not align with the share of global wealth, emphasizing that global investors should pay attention to the Indian market
According to the Zhitong Finance APP, Christopher Wood, Global Equity Strategist at Jefferies, stated that the U.S. stock market has long passed its "golden period," and investors should prepare for further declines in U.S. stocks, U.S. bonds, and the U.S. dollar.
Wood pointed out that the market capitalization of U.S. stocks in the MSCI All Country World Index reached a historical high at the end of December last year. He believes that "U.S. stocks have peaked" and compares it to the Japanese stock market in 1989, stating, "The U.S. dollar has entered a long-term depreciation trend, which will reduce the market capitalization of U.S. stocks in the global stock market."
Wood advises investors to consider increasing their allocation to assets in China, India, and Europe when rebalancing their portfolios.
The veteran strategist's pessimistic view of the U.S. market resonates with the prevailing pessimism around the globe. As President Donald Trump chaotically implements tariff policies, there is a growing belief that "American exceptionalism" is fading.
Wood mentioned that the market capitalization of U.S. stocks accounts for about 60% - 70% of the total market capitalization of the global stock market, but its economic share in global wealth is not that high. "Compared to other markets, U.S. stock valuations are at extreme levels. The same was true for the Japanese stock market at the end of 1989."
The U.S. stock market narrowly avoided a bear market, contrasting sharply with the continuous rally earlier this year. The S&P 500 index has rebounded from its low this month, but is still down 8.6% year-to-date, underperforming major stock indices in Europe and China.
Wood stated, "The issue is not just the decline of U.S. stocks, but also the rise of European, Chinese, and Indian stock markets."
Wood also noted that most global investors have not ventured into the Indian market. "I think they should. Any global emerging market investor would typically hold Indian-related assets, and I believe global funds should also allocate to Indian assets."
