JSW Corporation: US stocks have erased all their losses from the Brexit shock and tracked to new all-time highs but Shenzhen, China-based money manager, JSW Corporation says they will have a hard time going much higher in the absence of a timetable for more stimulus.
With corporate earnings showing less than stellar growth and a US economic recovery that still looks relatively fragile despite last week’s blowout jobs report, there may be little in the way of justification for a push higher.
The Dow Jones Industrial Average closed out Wednesday’s trading session up only 24 points at 18372.12 as investors marked time looking for direction.
“There are all sorts of rationales being given for this largesse in US stocks but the only thing driving this optimism is the sense investors have that the world’s central banks are going to use monetary stimulus to boost economic growth,” explained Vivian Wang, Chief Economist at JSW Corporation.
“The Bank of Japan, the Bank of England and potentially the European Central Bank are all contemplating more stimulus to boost their economies in the face of the continuing global slowdown. Investors know that it’s highly improbable that the US Federal Reserve can raise interest rates when the rest of the world is trying to lower them as much as possible, “she added.
The Bank of England is expected to lower interest rates by 25 basis points to 0.25% to help boost confidence in the British economy post-Brexit and JSW Corporation believes that the central bank will ramp up its quantitative easing program by £50 billion.

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