Amundi Asset Management: U.S. stock valuations remain high, while stock valuations in other regions are relatively more attractive

According to the Zhitong Finance APP, on May 23, Amundi Asset Management released its global investment outlook. In terms of fixed income, Amundi Asset Management expressed a cautious attitude towards U.S. high-yield bonds. In terms of equities, the asset management institution stated that the rotation allocation situation that began at the end of last year continues, and the pace has accelerated due to the trade war, with U.S. stocks being the first to bear the brunt, leading to a downward adjustment in valuation multiples. However, the valuation of U.S. stocks remains high, while valuations in other regions are relatively more attractive. In Europe, investors need to pay attention to the extent to which fiscal stimulus measures and infrastructure spending can offset the impact of tariffs. The duration of the ongoing rotation allocation trend depends on corporate earnings and the level of confidence companies have regarding the impact of tariffs. Although Amundi Asset Management expects earnings guidance to be relatively pessimistic, it believes that companies in Europe, the UK, and Japan with robust fundamental factors and a focus on domestic markets still present investment opportunities. Amundi Asset Management mentioned that the extreme uncertainty of U.S. policies has led to significant market volatility and increased turmoil. The recent trend in bond yields reflects that the market has shifted from choosing safe U.S. assets to reassessing the status of U.S. Treasury bonds and the dollar as ultimate safe assets. The institution believes that it is still too early to question the reliability of U.S. assets, but also acknowledges that any challenge to the independence of the Federal Reserve and significant policy uncertainty could undermine investor confidence. For example, investors perceive risks related to capital outflows and actions to adjust positions in the market, leading to a divergence between recent U.S. yields and the dollar. Monica Defend, head of investment research at Amundi Asset Management, stated, “We believe the Federal Reserve will lower policy rates three times this year, and if the unemployment rate worsens, further cuts may follow. Additionally, the pressure on U.S. economic growth will affect Europe, but the impact on stock prices will first depend on the level of valuation multiples.” In terms of fixed income, Amundi Asset Management noted that due to the uncertainty of import tariffs, both U.S. term premiums and inflation expectations have risen. Although the Federal Reserve must address inflation pressures in the short term, inflation is not a significant issue for the European Central Bank. This situation may lead to a divergence in policies between the two major global central banks, therefore Amundi Asset Management has lowered its expectations for the terminal rate of the European Central Bank. Specifically, the decline in energy prices, the EU's mild response to tariffs so far, and moderate wage growth in Europe all indicate limited inflation risks. Furthermore, any signs of economic slowdown may affect corporate fundamentals, particularly in the U.S. Therefore, the asset management institution maintains a strict selection principle for credit and duration globally, continuing to favor high-quality credit. Amundi Asset Management stated that emerging markets are highly sensitive to the development of global trade, U.S. government policies, and geopolitical developments, but the impact of U.S. tariffs seems more pronounced in certain regions/countries. At the same time, stable local economic growth in some regions and a lower correlation between economic cycles and international trade represent significant long-term opportunities for diversification and income generation. In terms of multi-asset, Amundi Asset Management believes that on "Liberation Day," U.S. policies have clearly shifted to a more chaotic trading approach. Whether U.S. economic growth will slow down will depend on the duration of these tariffs and the retaliatory actions of trade partners These actions have already undermined the confidence of investors and consumers, and the market is questioning American exceptionalism, but the macroeconomic, credit, and liquidity environment remains reasonable. In this context, Amundi Asset Management believes that the dominance of the US dollar in the foreign exchange market is at risk. Meanwhile, the asset management firm suggests that investors should maintain protective measures in their portfolios, such as gold