Shares nosedived around the world on Monday as higher US tariffs and a backlash from Beijing triggered massive sell-offs. US futures signalled further weakness ahead. The future for the S and P 500 lost 4.8 per cent while that for the Dow Jones Industrial Average shed 4.1 per cent. The future for the Nasdaq lost 5.3 per cent.
As global uncertainty grows, investors seek advice on handling market volatility. Experts from Morgan Stanley, Nomura, and CLSA share their views on US and Indian stocks.
Jonathan Garner of Morgan Stanley advises investors to adopt a defensive strategy and adjust their portfolios due to changing market conditions.
He mentions the growing risk of a US recession, as the federal reserve may not act quickly because of tariff costs and inflation pressures. “Our US economics team notes that the risk of recession has increased, while the Fed is less likely to act early due to tariff and inflation pressures,” Garner wrote, quoted by CNBC TV18.
Morgan Stanley recommends focusing on bond-proxies such as utilities, telecommunications, and consumer staples, which are more stable during market volatility.
The firm maintains an “underweight” stance on sectors like semiconductors, hardware, autos, and cyclicals, which are more affected by economic changes. Despite possible pullbacks in gold and defence stocks, Morgan Stanley advises buying during market weakness, CNBC TV18 report added.
Chetan Seth from Nomura said that India is the preferred choice for Asia-Pacific investors looking to take advantage of the dip. While US stocks are nearing oversold levels, he mentioned that their valuations are still not attractive for immediate investment.
“Overall, continue to recommend defensive positioning on Asia Ex-Japan stocks, unless the US policy course reverses. We are particularly cautious on Taiwan, Korea and also on Chinese equities,” the report quoted Seth as mentioning.
Laurence Balanco of CLSA said the market sell-off hasn’t reached a point of capitulation, indicating the selling is still orderly. He believes short-term rebounds will be limited.
“While many markets are now exhibiting extreme momentum readings and excessively bearish sentiment readings, the fact that daily momentum indicators are confirming lows suggests any short-term rebounds are likely to be limited and followed by further weakness,” Balanco added.
