Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com--Stocks are riding a wave of optimism, pushing equities to multiple fresh record highs. But Macquarie analysts warn that looking beyond the tech-led rally, cross-asset signals including gold’s relentless rise suggest there are deeper reasons for cautious optimism in markets.
“Gold’s inexorable rise would not be happening unless some traders anticipate money printing due to high debts or a dramatic shift in the status of the U.S. dollar in global trade and capital flows,” the analysts said. “China’s policymakers have officially called for global financial governance to be reformed, diversifying monetary and cross-border payment systems and enhancing emerging markets’ representation in major international institutions.”
Despite tensions like the U.S.-China sparring over NVIDIA Corporation (NASDAQ:NVDA), investors are finding reasons to buy big tech stocks, while hedging against dollar risks. The Fed is expected to cut rates by 25 basis points on Wednesday amid signs that U.S. firms are reluctant to hire, but it is unlikely to signal a long string of cuts, balancing employment risks with inflation concerns.
The analysts also point to diverging central bank paths as a key theme: while the Fed leans toward easing, others including the European Central Bank and Bank of Japan are ending easing or moving toward tightening. This divergence has supported a softer dollar, with the US Dollar Index index retreating near July lows.
Meanwhile, some emerging markets show promise. Chile’s pro-market candidate Jose Kast looks set to win the December runoff, potentially boosting the Chilean peso alongside rising copper prices. These political developments add further layers to market optimism, even as underlying geopolitical shifts prompt caution.