Europe and Asia to see greater economic dominance, says DBS
As major economies made adjustments to their monetary policies, Europe and Japan have wrested back control of local stock markets from U.S. influence, according to a quarterly report released by DBS Taiwan ( ).
The world economy faced more uncertainty because of three factors: a strong U.S. dollar, divergent fiscal policies adopted by major economies and American enterprises’ falling profit growth.
DBS forecast a booming U.S. stock market in the next few months, which is expected to provide momentum for Asian stock markets (not including Japan). However, the U.S. economy may take a hit after the U.S. Fed raises interest rates later this year. With ramifications from this, DBS holds a more conservative stance on economic performance over a 12-month period.
Europe and Japan are poised to see greater growth. Loose monetary policies have enabled a weakened euro and yen, which has translated into greater export competitiveness and higher corporate profitability.
In other parts of Asia, DBS is placing its bets on China, as the country may still cut interest rates, while its weak currency buoys the local economy and stock market.
Gold may rebound as well, according to DBS’s report, as negative rates