CITIC Securities said U.S. stocks are likely to remain under valuation pressure in the near term after the market missed the latest rate-hike timing, regardless of whether the Federal Reserve raises rates in September. In a note cited by BlockBeats on Aug. 2, the firm said the longer-term picture could improve once the hiking cycle is fully behind the market, which may ease valuation constraints. It also said a supportive stance on AI from the “Productivity and Employment Working Group” could help sustain the AI narrative in U.S. equities over time. The brokerage pointed to the July 29 Federal Open Market Committee meeting, where policymakers left rates unchanged for a fifth straight time, while three voting members backed a 25 bps hike. That, it said, made internal Fed divisions more visible and triggered a split market response described as “dovish at the short end, hawkish at the long end.” CITIC Securities also said rising inflation expectations have weighed on the U.S. dollar and opened a window for Japan’s Ministry of Finance to intervene in the foreign-exchange market. At the sector level, strong growth in CSP cloud businesses has partly eased concerns over the sustainability of AI-related triple capital expenditures. The firm said rate-sensitive sectors, high-valuation low-growth names and small caps may stay under pressure in the short run, with the next liquidity expectation pivot likely around the late-August Jackson Hole symposium or the September policy meeting.
BlockBeats reported on Aug. 2 that CITIC Securities said U.S. equity valuations are still likely to face pressure in the near term after the market missed the latest rate-hike timing, regardless of whether the Federal Reserve delivers another increase in September.
The brokerage said the medium- to long-term picture could improve once rate hikes are fully out of the way, as that may release some of the valuation pressure. It also said the U.S. equity AI narrative could continue over a longer period, helped by the “Productivity and Employment Working Group” taking a positive stance toward AI.
July 29 FOMC meeting exposed divisions inside the Fed
CITIC Securities said the Federal Open Market Committee left rates unchanged on July 29 for a fifth straight meeting, but three voting members supported a 25 bps hike, making internal divisions within the Fed public.
According to the firm, that led to a split market reaction described as “dovish at the short end, hawkish at the long end.” It added that rising inflation expectations have weighed on the U.S. dollar and created a window for Japan’s Ministry of Finance to intervene in the foreign-exchange market.
AI capex concerns eased partly by CSP cloud growth
On the industry side, CITIC Securities said high growth in CSP cloud businesses has partly eased concerns about whether AI-related triple capital expenditures can be sustained.
In the short term, the firm said rate-sensitive sectors, high-valuation low-growth segments and small-cap stocks are under pressure. It said the next window for a shift in liquidity expectations will likely be the late-August Jackson Hole symposium or the September rate-setting meeting.
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