JPMorgan: A weakening US dollar will benefit global stock markets rather than drag down risk assets

Odaily Planet Daily reports that JPMorgan analysts believe that although investors are concerned that exchange rate fluctuations could impact the stock market, a weakening dollar should support stocks rather than harm them.

JPMorgan notes that despite recent volatility in commodities, bonds, and crowded trades, economic growth remains solid. Federal Funds Rate futures currently price in about a 55 basis point cut by the end of the year, providing a supportive backdrop for risk assets. JPMorgan holds a bearish view on the dollar, with historical data showing that a weaker dollar often correlates with stronger stock market performance, especially in emerging markets.

JPMorgan maintains a positive outlook on emerging markets and commodity stocks and recommends investors buy metals assets on dips. In European markets, although a stronger euro may impact approximately 25% of dollar-denominated income conversions, the robust growth during euro appreciation typically offsets this negative effect, and cyclical sectors usually rise along with the euro.