Fidelity: Based on trade-related factors, the US dollar is likely to continue to be supported.
Widespread tariffs and any subsequent retaliatory actions or trade wars will impact inflation and harm growth.
Fidelity stated that, in terms of currency, the US dollar is likely to continue to be supported based on trade-related factors, especially against the Mexican peso, the euro, and the Canadian dollar. As for the credit market, the recent strong demand for yields overall is expected to continue to provide support, but spreads may be more vulnerable to changes in growth, trade, and geopolitical concerns.
Financial, energy, and defense industries are likely to benefit from any relaxation of regulations. If the Biden administration's Inflation Reduction Act and clean energy policies are rolled back, the utilities industry could face challenges, while the consumer goods and automotive industries may face unfavorable factors due to tariffs.
In terms of global impact, the Eurozone's growth is fragile, and the business fundamentals are not as strong as in the US, making the European markets vulnerable to setbacks. The struggling European automotive industry is likely to continue to underperform the broader market, with the biggest concern being trade tensions, and cyclical industries will continue to be under pressure.
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