Online stockbroker Colfinancial.com Confinancial.com said prospects in the stock market may start to improve soon as the worst of its current challenges are steadily fading out.
April Tan, Confinancial.com head of research said for one, commodity prices are starting to go down.
The likelihood of a US recession would mean less space for the US Fed to raise rates further. Also central banks of other countries are actively fighting the further weakening of their currencies against the dollar, which redounds to more breathing space for the peso vis-a-vis other currencies, particularly the dollar, Colfinancial said.
After commodity prices spiked to record highs in the aftermath of the Russian invasion of Ukraine, commodity prices are now tapering down, noted Tan.
“The prices of commodities are already down for the year to date spirits, I mean, it’s not across the board. But in general, the trend is, it has peaked and has gone down. And even oil that is very sensitive to the Russia, Ukraine war, it has gone down from a peak and is now back to pre Ukraine war level,” Tan said in a talk to Confinancial.com clients.
“It’s still elevated, but at least it’s not as high as it used to be,” she added.
As the US economy enters a recession, this will lower consumer confidence that could stem the inflationary impact of spending. A taming of inflation will lessen the pressure for the US Fed to aggressively raise interest rates.
“I think there is a strong likelihood that the Fed, even if they raise interest rates, it will be the last few ones. It may already stay on hold… (Fed) chairman (Jerome) Powell already said that, they will not be giving any more forward guidance, and they will be looking at the indicators more going forward. So it could be a sign that they are softening their stance on inflation already. So it will be interesting what happens in the next few months,” Tan said.
