Second half stock market, Recovery may be difficult to sustain... Five warning signs Wall Street is wary of

Bloomberg Viewed The Possibility Of A Rebound In The Us Stock Market In The Second Half Of The Year As Low (Source: CNN)

The Us Stock Market In The First Half Of This Year Showed An Unstable Trend, Repeating Rises And Falls. Concerns Are Growing That Volatility Will Continue In The Second Half Of The Year. On June 28, Bloomberg Reported That Global Investors Are Likely To Maintain A Defensive Stance For The Time Being And Pointed Out Five Major Risks That Could Threaten The Market In The Future.

The Most Imminent Factor Is The Deadline For Trade Negotiations Scheduled For July 9. There Are Forecasts That If The Negotiations Are Not Concluded By This Deadline Set By President Donald Trump, Us Import Tariffs Could Be Increased Much More Than Before. The Uk Has Already Completed Its Negotiations, But Discussions With The European Union Are Still Underway, And Talks With India, Japan, And Canada Are Being Delayed. Particularly, Since Canada Is Pursuing The Introduction Of A Digital Tax, And President Trump Has Suggested A Strong Response, Uncertainty In The Negotiations Is Expanding. UBS Strategist Antti Juvonen Stated, "Market Tension Will Continue Until A Definitive Agreement Is Reached," Not Easing His Guard.

The Second Risk Factor Is Corporate Performance. Major Us Companies Are Soon To Announce Their Second Quarter Earnings, But Rising Prices And Slowing Consumption Are Putting Pressure On Profitability. In A Recent Survey Conducted By The Business Roundtable, Ceos Responded That Their Economic Outlook Is Gloomier Than Before. Employment And Investment Plans Have Also Been Generally Reduced. Federated Hermes Manager Louise Dudley Evaluated The Current Situation As “A Phase Where Companies Are Lowering Their Expectations.”

The Third Geopolitical Risk Cited Seems Somewhat Mitigated But Still Makes The Market Uneasy. Although The Truce Between Israel And Iran Has Led To Oil Price Stabilization, Iran's Nuclear Development Issue Is Still Ongoing. Even Though The Us And China Have Proposed A New Trade Structure, The Lack Of Concrete Agreements On Key Issues Such As Semiconductors Technology Transfer And Rare Earth Supplies Leaves Investors Unsettled. Santander Asset Management Strategist Francisco Simon Said He Is Still Maintaining A Low Stock Allocation, Stating, “I Am Sticking To Selective Investments.”

The Fourth Variable Is The Us Fiscal Situation And The Issue Of Fed Chair Replacement. Last May, The Us Lost Its Last AAA Credit Rating, And President Trump's Large-scale Tax Cut Plan Is Expected To Cause A Massive Fiscal Deficit. Also, Fed Chair Jerome Powell’s Term Ends In May Next Year, And The Market's Tension Is Increasing During The Succession Process. There Are Concerns That If The Independence Of The Fed Is Undermined, A Shock Similar To The Uk's Liz Truss Situation Could Occur.

Finally, The Market Is Closely Watching The Valuation Level Of The S& P500. The Current 12-month Forward Price-earnings Ratio Is 22 Times, Higher Than The 10-year Average. Some Investment Institutions Suggest That The Current State May Be Maintained For The Time Being Due To The Strength Of Tech Stocks And Expectations For Interest Rate Cuts, But The Voice For Adjustments Is Large In Case The Economic Slowdown Becomes Visible. Invesco's David Chao Mentioned, "Foreign Stock Markets Are Trading At Lower Prices Than The Us," Indicating The Possibility Of A Narrowing Valuation Gap With The Us Stock Market In The Future.

It Is Still Uncertain Whether The Rebound Trend That Led The Market In The First Half Will Continue In The Second Half. It Is Time For Investors To Focus On Risk Management Rather Than Seeking Profit Opportunities.