Invesco: Global economic growth is expected to improve, bullish on cyclical and small cap stocks.

JPMorgan's Chief Global Market Strategist Kristina Hooper, along with Asia Pacific Global Market Strategist (excluding Japan) Zhao Yaoting, pointed out that as expected by the market, the Federal Reserve unanimously decided to cut interest rates by 25 basis points. This indicates that the Federal Reserve is satisfied with the current inflation level and believes that the risks to employment and inflation targets are balanced. JPMorgan believes that global economic growth is expected to improve, therefore they are optimistic about cyclical and small-cap stocks, as their valuations are attractive and they are more sensitive to the economic cycle. Similarly, JPMorgan also favors developed markets (excluding the United States) and emerging market stocks. As central banks around the world begin to cut interest rates, valuations are expected to be supported by lower discount rates. Since the end of the summer, the U.S. economy and labor market have continued to strengthen. Federal Reserve Chairman Powell pointed out that overall inflation in the United States is currently slowing down, but housing service prices are an exception. However, this does not reflect current inflation pressure, but rather past inflation pressure. Powell explained that the reason the Federal Reserve decided to continue cutting interest rates is because they believe that monetary policy is still restrictive. In addition, he stated that over the past two years, the U.S. labor market has cooled and is still slowing down, and the Federal Reserve does not want to see it decline further. When asked what data would lead the Federal Reserve to pause interest rate cuts in December, Powell did not give a specific response. Clearly, the Federal Reserve will make decisions based on overall data, as the Federal Reserve is currently focused on the "dual mandate": achieving full employment and core inflation dropping to 2%. Although JPMorgan expects the Federal Open Market Committee meeting in December to cut interest rates by another 25 basis points, there is still a possibility of pausing interest rate cuts. Currently, this round of easing has cut rates by 75 basis points. This is equivalent to the total rate cuts during the 1995-1996 easing cycle. Furthermore, in JPMorgan's view, the Federal Reserve has more room for adjustment this time, so it is very favorable for risk assets. In terms of bonds, as bond yields are near multi-year highs, JPMorgan believes that bonds will also provide attractive opportunities with interest rate cuts. Considering that the duration of bank loan existence is almost zero, JPMorgan expects that compared to other fixed-income asset classes, they can be protected from interest rate fluctuations and improve fixed-income investment portfolios. JPMorgan expects the dollar to weaken, so local and hard currency bonds in emerging markets are expected to perform well. Regarding real estate, JPMorgan believes that the market has already absorbed serious negative sentiment, so with the improvement of the environment, the market has the potential to rise significantly. For example, the reduction in policy rates provides room for lower real estate debt costs and capitalization rates, which will boost transaction activity and promote price recovery. In addition, in terms of currency, JPMorgan expects that as the Federal Reserve starts cutting interest rates, the dollar will begin to weaken during the year, at least relative to some major currencies.