No braking in sight for stock exchanges, doubts prevail on Fed cuts

(Il Sole 24 Ore Radiocor) - No braking in sight for financial markets, despite continuing uncertainties over the global economic outlook, tariffs and the geopolitical situation. This is the sentiment of financial market operators surveyed in May by Assiom Forex in the usual monthly survey conducted among its members, in collaboration with Il Sole 24 Ore Radiocor.

74% of the respondents (up from 73% in the April survey) believe that between now and the end of the year the main stock markets will remain at least at their current levels. Of these, 35% (up from 33%) expect further gains, ranging between +3% and +10%, while 2% indicate a sharp rise (up from 6%), and 37% see stock exchanges standing still (34% a month earlier). The share of those who see a drop in indices over the next six months remains stable at 25%. "Italian financial operators maintain a positive outlook on stock markets, despite the current macroeconomic uncertainty fuelled by the US administration's continuous statements, which have prompted the OECD to revise downwards its global growth estimates," commented Massimo Mocio, President of Assiom Forex.

Uncertainty remains about the next steps of the Federal Reserve led by Jerome Powell. Although 96% believe there will be an easing of the cost of money in the US, opinion is almost equally divided on the extent of the cuts.

Unlike the ECB, which made its eighth consecutive cut at its last meeting, the Fed continues to maintain a more restrictive stance. Thus, 42% of respondents expect only one intervention of 25 basis points by the US central bank, while 48% expect two. Only a timid 6% assume more than two or three cuts, while there are also those who suspect that no cuts will come at all (4%). "Opinions are almost equally divided between those who assume a single intervention of 25 basis points and those who foresee two," notes Mocio.

Traders continue to bet on the euro strengthening against the dollar in the coming months. Indeed, 50% of those surveyed expect a new appreciation of the single currency against the greenback (up from 52% in April) despite the decisive gains in recent weeks that have broughtthe euro close to 1.15 against the dollar. At the same time, the share of traders expecting a stable exchange rate increased (from 26% to 34%), while only 16% bet on a stronger dollar. This marks a further reduction from the 22% in the previous survey. The change of direction in the relationship between the two currencies became more evident from the beginning of April onwards, after the announcement of the punitive maxi-rates announced by the Binaca House on Liberation Day. Since then, the responses regarding a weakening of the euro have drastically reduced (in February the share was 40%).