Amundi: Maintains its expectation of a slowdown in U.S. economic growth, more optimistic about emerging markets

According to the Zhitong Finance APP, the global investment outlook for September 2025 published by Amundi, the largest asset management company in Europe, indicates that the U.S. stock market reached a new high in August, while the European market approached the levels seen in March, with corporate credit spreads narrowing during the summer. Market sentiment was influenced by expectations of capital expenditure in artificial intelligence, strong performance during the U.S. earnings season, and the relatively dovish stance of the Federal Reserve at the Jackson Hole meeting. The market seems to overlook risks related to economic activity (such as the labor market), political pressures faced by the Federal Reserve, fiscal deficits, and corporate profit margins. Additionally, emerging markets are expected to benefit from a weaker dollar and the Federal Reserve's potentially forthcoming rate cuts, leading Amundi to adopt a more positive outlook. Yield Curve Steepens Amid Deficit Concerns Key themes that Amundi will focus on in the medium term include: rising U.S. inflation expectations in the short term, fiscal spending plans in the U.S. and the EU (i.e., increased bond supply), and ongoing accommodative monetary policy. Under the combined influence of these factors, yields in the U.S., Europe, the UK, and Japan have risen, particularly in long-term bonds. Furthermore, pension system reforms in some European countries will further push up long-term yields. In the UK, the company is monitoring inflation conditions and the government budget (to be announced in November), as well as whether the government can convince the market that its financing capabilities will not pose a problem. On the other hand, while corporate bond spreads are narrowing, it believes there are individual value opportunities and attractive spreads in areas such as high-quality European bonds. Diversification Recommended During Concentrated Risk Periods Despite ongoing geopolitical noise and unclear policy factors, global stock markets continue to rise. The artificial intelligence sector supports the market, while objective statistical data has yet to show signs of the impact of tariffs. U.S. corporate earnings have performed better than expected, but concentrated risks are rising. Therefore, the company tends to continue shifting funds from the U.S. market to European and Japanese markets. Amundi believes that Europe can more effectively mitigate some tariff-related shocks through fiscal and monetary policy. Reforms aimed at enhancing competitiveness at the EU level and declining energy costs will also benefit Europe. It is expected that various markets will continue to experience volatility, and efforts will be made to seize profit opportunities arising from weak stock prices of quality companies. Overall, there is a continued preference for financially sound companies and special risks. Emerging Market Special Themes Resurface Global emerging markets are once again presenting country-level factors: China's economic environment has improved (external pressures have eased but domestic demand remains weak), and India's economic conditions have also improved, while the political situations in Brazil and Indonesia have once again become focal points. However, trade fluctuations remain a significant factor affecting the entire emerging market. In countries like India, internal tax reforms are beneficial for boosting domestic consumption, which is a major pillar of growth. Overall, given the Federal Reserve's dovish stance, global investors are likely to benefit from stronger growth and positive earnings momentum in emerging markets, thereby diversifying their investments away from the U.S. market. Amundi is closely monitoring geopolitical risks and developments in trade Preference for Risk Assets While Shifting to Emerging Markets During the summer, macroeconomic data from Europe and the United States did not show extreme conditions, allowing the market to remain relatively stable. However, even with the confirmation of increased tariffs in the U.S., the labor market continues to deteriorate. These two factors are expected to suppress consumption, and Amundi maintains its expectation of a slowdown in U.S. economic growth. On the other hand, monetary policies in both Europe and the U.S. are expected to trend towards easing. Therefore, the company is slightly optimistic about risk assets (including emerging markets) and believes there is a need to allocate to gold (to address geopolitical risks and fiscal deterioration) and stock hedging tools to enhance protection. Amundi is optimistic about stocks, including U.S. stocks (with a balanced allocation between large-cap and mid-cap) and slightly optimistic about UK stocks, but has strategically downgraded European stocks to neutral (as tariffs may drag down corporate earnings), while raising its outlook on emerging markets. Emerging markets encompass diverse markets such as India, and Amundi holds a more positive view on them. Emerging markets are expected to benefit from a weaker dollar and the Federal Reserve's potentially forthcoming dovish stance on interest rate cuts