Fidelity: The impact of tariffs on the economy will gradually emerge, and the outlook for the U.S. stock market is conservative

According to the Zhitong Finance APP, Jian Liheng, Director of Investment Strategy at Fidelity International, pointed out that there has been new progress in the recent China-U.S. trade negotiations, with both sides agreeing to temporarily lower tariffs, leading to an optimistic market reaction. This news has boosted investor sentiment and reduced expectations of recession risks. Currently, the impact of tariffs is milder than the market had anticipated, but the reduction in tariffs is temporary, and there are likely to be significant differences in future negotiations, considering that the previously announced high tariffs have already caused some disruption, and the impact on economic performance will gradually emerge.

Currently, there is uncertainty in monetary, fiscal, and trade policies, coupled with a contraction in government spending and a decline in corporate investment willingness. The market is concerned about the possibility of economic recession and stagflation in the U.S., putting the Federal Reserve in a dilemma regarding interest rate policy. In addition, the tightening of immigration policies in the U.S. may affect corporate production costs and overall consumer willingness, which will put greater pressure on the highly valued U.S. stock market, leading to a more conservative outlook for the U.S. market.

In Europe, although U.S. tariff policies affect EU trade, local increases in fiscal spending and interest rate cuts are expected to reduce the overall economic impact. In the first quarter of this year, a significant amount of capital has already shifted from the highly valued U.S. stock market to Europe, and Fidelity is more optimistic about Europe compared to the U.S.

As for the mainland and Hong Kong stock markets, the China-U.S. trade negotiations will continue to dominate market sentiment. However, Chinese mainland enterprises have reduced their dependence on exports to the U.S. in recent years, shifting towards stimulating domestic demand, along with a series of fiscal and financial policies that will help maintain economic stability. It is expected that the future growth momentum in mainland China will come from stimulating local consumption and promoting technological development, supporting enterprises in reducing costs and enhancing profitability through the application of AI. Economic data for the second quarter is about to be released, and with ongoing China-U.S. trade negotiations, uncertainty remains high, leading to a cautious investment stance.

In the Asia-Pacific region, Southeast Asia, Taiwan, and India are clearly unprepared to cope with tariffs. In contrast, Australia, which imports most goods from the U.S., is less affected in this trade war and is expected to provide defensive investment options. Additionally, Fidelity's view on Japan is relatively neutral, as local demand shows resilience, companies continue to repurchase stocks, and attractive earnings support the Japanese stock market. However, facing external uncertainties and greater inflationary pressures driven by wage demands, the interplay of various factors will influence the Bank of Japan's stance, affecting the yen's movement and corporate earnings expectations