Invesco: Tariff policy easing, optimistic about US stocks, especially small and mid-cap stocks
Invesco Asia-Pacific Global Market Strategist Zhao Yaoting stated that the recent easing of tariff policies and normalization of trade policies may drive the market back to its state before 2025. He is optimistic about the U.S. stock market, particularly small and mid-cap stocks, as well as investment-grade bonds in Europe and the U.S. The Chinese market is also recovering, with certain industries such as electric vehicle batteries and home appliances potentially benefiting. Although tariff uncertainties remain, the overall likelihood of an economic recession has decreased, and investors are optimistic about the recovery of the U.S. economy
According to the Zhitong Finance APP, Zhao Yaoting, Global Market Strategist for Invesco Asia Pacific (excluding Japan), believes that the recent easing of tariff policies, normalization of trade policies, and the current focus of the United States on tax cuts may drive the market back to its state before 2025. The firm is optimistic about U.S. stocks, especially small and mid-cap stocks, and also favors investment-grade bonds in Europe and the U.S. due to their attractive yields and improving macro markets. The Chinese market has generally returned to levels seen before the U.S. announced "Liberation Day" tariffs in early April. Industries such as electric vehicle batteries, construction machinery, home appliances, and pet food companies in China may benefit from this.
The rapid progress in U.S.-China trade negotiations has surprised the market. Coupled with the trade agreement reached between the U.S. and the U.K. last week, it is clear that the White House hopes to ease trade tensions faster than expected. As investor concerns over tariffs begin to diminish, stock markets in the U.S., India, and Japan have risen in recent weeks.
He stated that from the perspective of the Chinese economy, this significant easing could drive a surge in exports in the coming months. Nevertheless, the imposition of an additional 30% tariff on goods imported from China to the U.S. may have an impact, meaning that everyone will be paying attention to how these tariffs affect U.S.-China economic activity in the next 90 days. Additionally, tariff uncertainties remain in industries such as electronics and semiconductors.
Invesco noted that market tensions caused by fluctuations in local U.S. policies have led to recent downgrades of U.S. assets. The firm may now see these capital flows reverse. The reduction in tariff uncertainties has also lowered the likelihood of an economic recession. Therefore, while the U.S. economy may still slow down as "hard" economic data catches up with weak "soft" data, investors may look past the downturn and begin to anticipate a recovery in the U.S. economy and assets. The U.S. government seems to be shifting its policy direction, easing tariff policies while focusing on implementing more growth-promoting policies, such as tax cuts
