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- Trade ceasefire rally could be short-lived, market strategists warn
Trade ceasefire rally could be short-lived, market strategists warn
Stocks are surging on the trade truce, but it may be a short-lived rally once investors realize it could take months of tough talks to get to a trade agreement and the risk of more tariffs remains.
Both Bank of America Merrill Lynch and Morgan Stanley say a stock market correction could be in the offing this summer, despite the fact the U.S.-China trade war cooled a bit this weekend.
“We still expect a 10 percent correction during 3Q as this past weekend’s agreement is viewed as a sell the news event,” wrote Morgan Stanley chief U.S. equity strategist Mike Wilson.
At Bank of America, analysts were also skeptical.
“The fact that there was no major breakthrough is consistent with our ‘no pain, no deal’ framework: at the moment the economy and markets are not weak enough to incentivize the US to make compromises,” noted Bank of America strategists.
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