Finance Associated Press November 28th news (Editor Xia Junxiong) JPMorgan strategists predict that unless geopolitical and trade policy risks recede, the US stock market will continue to outperform global markets next year.

This year, the S&P 500 index as a benchmark has risen by 26%, hitting historical highs multiple times. This is mainly due to the strong performance of the US economy, the trend of artificial intelligence (AI), and the Fed's start of an interest rate cut cycle in the background of decreasing inflation.

JPMorgan strategists led by Mislav Matejka wrote in a report released on Wednesday: "The current phase of diverging regional market performance may continue. Although the valuation multiples of international markets are not high, and the US market appears overvalued, the gap between them may remain at a high level for some time."

Since the beginning of this year, the return on the MSCI global index excluding the USA is only 3.5%. The valuation gap is also widening, with US stocks trading at a record 60% premium in terms of expected PE compared to international markets.

After Donald Trump won the election, investors further strengthened their preference for US assets because traders expect his policies to exacerbate global trade tensions.

JPMorgan strategists point out that given the extreme allocation of US stocks and the valuation and performance gap with international markets, the performance of international markets may catch up with or approach the US market. However, they also stated: "However, before making the transition, it is necessary to first gain more clarity on trade and geopolitical issues."

Matejka holds a cautious view on the overall stock market in the first half of next year, recommending investors to closely monitor Fed policies, the trend of the US dollar, and corporate profit growth expectations, especially for Europe, where he believes current forecasts are too optimistic.

Matejka stated: "Taking into account the factors mentioned above, along with increased geopolitical uncertainties, it may mean that the performance at the beginning of next year will be more mixed, as the aforementioned pressures will be resolved, followed by a recovery."

It is worth mentioning that another strategist at jpmorgan, Dubravko Lakos-Bujas, forecasted in Wednesday's report that the s&p 500 index will rise to 6500 points.

Lakos-Bujas' forecast for the performance of the US stock market this year has been proven to be too conservative, as he previously predicted a target level for the s&p 500 index in 2024 at 4200 points.

Editor / jayden