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Yahoo
12 hours ago
- Business
- Yahoo
Wells Fargo Says To Avoid This Investment and Buy US Stocks Instead — Should You Invest?
In a recent note to investors, Wells Fargo analysts mentioned that they recommended avoiding emerging market equities right now. Trending Now: Read Next: Since the massive bank holds a weighty opinion, it's worth digging into their suggestion. GOBankingRates unpacks Wells Fargo's recommendation and what that means for your portfolio. Investing in emerging markets allows investors to diversify their portfolio beyond U.S. stocks. While you can target specific emerging markets, like India or Indonesia, opting to purchase an index fund focused on a broad swath of emerging markets can give you some exposure across multiple economies with minimal effort on your part. For example, the MSCI Emerging Markets index offers a popular way for U.S.-based investors to add exposure to emerging markets to their portfolio. In the last year, the MSCI Emerging Market Index saw a net return of 13.04%, which is significantly higher than the S&P 500, which saw a slight decline. While you might think that the outperformance of the MSCI Emerging Market Index over the S&P 500 would warrant investing more heavily in emerging markets, the opposite is true in Wells Fargo's opinion. Since the MSCI Emerging Market Index did so well in the last year, the analysts recognize that many investors who had invested in emerging markets will have seen their portfolio's composition change over the last year, with perhaps more weight in emerging markets than they would like. Explore More: The possible portfolio imbalance, with too much money invested in emerging markets and not enough in U.S. stocks, could represent a problem for some investors. Additionally, Wells Fargo remains unconvinced it's a good idea to stay so heavily weighted in favor of emerging markets. The note pointed to the structural risks of emerging markets, including 'political and economic instability, corporate governance concerns, variable regulatory risks, as well as China's excessive debt, slumping property sector, and slowing growth.' All of this to say, Wells Fargo's note encouraged investors to rebalance their portfolios more heavily toward U.S. stocks instead of emerging markets. In the statement, Wells Fargo said, 'we favor reallocating to U.S. Large Cap, U.S. Mid Cap, or Developed Market (DM) ex-U.S. Equities to maintain overall equity exposure.' Investors heavily weighted toward emerging markets might sell off some of those investments in order to purchase U.S. stocks. For example, you might sell some of your stake in the MSCI Emerging Markets index in order to buy more in a fund tied to the S&P 500. If building and managing your own investment portfolio, the right strategy varies based on your interests, skill level and time commitment. For investors with significant time and the patience to monitor the constant turns of the stock market, actively managing it could be a good idea. But if you are looking for a more hands-off approach with a long-term vision in mind, consider buying and holding low-cost index funds. As you buy and hold index funds for the long term, you can make big-picture changes to your portfolio, like adjusting toward or away from emerging markets occasionally. But, in general, you'll allow the investments to hopefully grow in value over the long term. Wells Fargo is suggesting that investors shift away from emerging markets toward U.S. stocks. For some investors, the shift could make sense. For others, following through on this change wouldn't align with their investment goals. Take the time to decide what's best for your situation before making any changes to your portfolio. More From GOBankingRates 3 Reasons Retired Boomers Shouldn't Give Their Kids a Living Inheritance (And 2 Reasons They Should) This article originally appeared on Wells Fargo Says To Avoid This Investment and Buy US Stocks Instead — Should You Invest?
Yahoo
a day ago
- Business
- Yahoo
Wells Fargo Says To Avoid This Investment and Buy US Stocks Instead — Should You Invest?
In a recent note to investors, Wells Fargo analysts mentioned that they recommended avoiding emerging market equities right now. Trending Now: Read Next: Since the massive bank holds a weighty opinion, it's worth digging into their suggestion. GOBankingRates unpacks Wells Fargo's recommendation and what that means for your portfolio. Investing in emerging markets allows investors to diversify their portfolio beyond U.S. stocks. While you can target specific emerging markets, like India or Indonesia, opting to purchase an index fund focused on a broad swath of emerging markets can give you some exposure across multiple economies with minimal effort on your part. For example, the MSCI Emerging Markets index offers a popular way for U.S.-based investors to add exposure to emerging markets to their portfolio. In the last year, the MSCI Emerging Market Index saw a net return of 13.04%, which is significantly higher than the S&P 500, which saw a slight decline. While you might think that the outperformance of the MSCI Emerging Market Index over the S&P 500 would warrant investing more heavily in emerging markets, the opposite is true in Wells Fargo's opinion. Since the MSCI Emerging Market Index did so well in the last year, the analysts recognize that many investors who had invested in emerging markets will have seen their portfolio's composition change over the last year, with perhaps more weight in emerging markets than they would like. Explore More: The possible portfolio imbalance, with too much money invested in emerging markets and not enough in U.S. stocks, could represent a problem for some investors. Additionally, Wells Fargo remains unconvinced it's a good idea to stay so heavily weighted in favor of emerging markets. The note pointed to the structural risks of emerging markets, including 'political and economic instability, corporate governance concerns, variable regulatory risks, as well as China's excessive debt, slumping property sector, and slowing growth.' All of this to say, Wells Fargo's note encouraged investors to rebalance their portfolios more heavily toward U.S. stocks instead of emerging markets. In the statement, Wells Fargo said, 'we favor reallocating to U.S. Large Cap, U.S. Mid Cap, or Developed Market (DM) ex-U.S. Equities to maintain overall equity exposure.' Investors heavily weighted toward emerging markets might sell off some of those investments in order to purchase U.S. stocks. For example, you might sell some of your stake in the MSCI Emerging Markets index in order to buy more in a fund tied to the S&P 500. If building and managing your own investment portfolio, the right strategy varies based on your interests, skill level and time commitment. For investors with significant time and the patience to monitor the constant turns of the stock market, actively managing it could be a good idea. But if you are looking for a more hands-off approach with a long-term vision in mind, consider buying and holding low-cost index funds. As you buy and hold index funds for the long term, you can make big-picture changes to your portfolio, like adjusting toward or away from emerging markets occasionally. But, in general, you'll allow the investments to hopefully grow in value over the long term. Wells Fargo is suggesting that investors shift away from emerging markets toward U.S. stocks. For some investors, the shift could make sense. For others, following through on this change wouldn't align with their investment goals. Take the time to decide what's best for your situation before making any changes to your portfolio. More From GOBankingRates 10 Cars That Outlast the Average Vehicle This article originally appeared on Wells Fargo Says To Avoid This Investment and Buy US Stocks Instead — Should You Invest? Inicia sesión para acceder a tu portafolio
The Star
2 days ago
- Business
- The Star
Asia shares hit over three-year high; dollar struggles on Fed concerns
SINGAPORE: Asia shares hit their highest level in more than three years on Friday as they tracked a Wall Street rally, but the U.S. dollar struggled on concerns about the Federal Reserve's independence and expectations for early rate cuts. Stock indexes worldwide look set to end the week on a positive note, with worries about tensions in the Middle East and uncertainty over tariffs and trade deals on the backburner for now. MSCI's broadest index of Asia-Pacific shares outside Japan hit its highest level since November 2021 early in the session, while the gauge of stocks across the globe hit another record high for the fourth straight session. EUROSTOXX 50 futures and DAX futures were both up more than 0.5%, while FTSE futures were little changed. S&P 500 futures and Nasdaq futures tacked on 0.1% each. Reasons for the upbeat mood included news that Washington has reached an agreement with Beijing on how to expedite rare earth shipments to the United States. U.S. Treasury Secretary Scott Bessent also said on Thursday that he had asked Republicans in Congress to scrap the Section 899 retaliatory tax proposal from their tax and spending bill after Washington reached an agreement with Group of Seven industrial countries. "That was something that had been making some investors, especially foreign investors, nervous when that provision was passed by the House. So if that provision gets removed, then that allays one of the concerns from foreign investors," said Khoon Goh, head of Asia research at ANZ. "The cumuluation of these various ... positive developments all helped to contribute to the buoyant market mood we're seeing." Japan's Nikkei jumped 1.4% and surpassed the 40,000 mark for the first time in five months. Stocks in Hong Kong and mainland China traded marginally lower, though the CSI 300 index was on track for a 2.6% gain for the week, which would be the largest since November 2024. FED CUTS COMING Much of the focus for markets over the past two sessions has been on the prospect of an early change of guard at the Fed, after the Wall Street Journal reported that U.S. President Donald Trump had toyed with the idea of selecting and announcing Fed Chair Jerome Powell's replacement by September or October. That knocked an already battered dollar even lower as traders fretted about an erosion of Fed independence and as they moved to price in more U.S. rate cuts this year. The dollar languished near a 3-1/2-year low on Friday and was headed for a 1.4% weekly loss, its largest decline in over a month. For the year, the greenback is already down more than 10% and if it stays that way in the next few days, that will mark its biggest first half-of-a-year fall since the start of the era of free-floating currencies in the early 1970s. Against a weaker dollar, the euro was perched near its highest in over three years at $1.1688. Sterling last bought $1.3725. "Trump's desire to 'shadow' the Fed using a designated replacement for Chair Jay Powell isn't a good way to promote the perceptions of integrity and autonomy in U.S. policymaking and, by extension, that of the reserve currency status of the U.S. dollar," said Thierry Wizman, global FX and rates strategist at Macquarie Group. Adding to the Fed cut bets has been a raft of weaker-than-expected U.S. economic data, with attention now shifting to Friday's release of the core PCE price index, the U.S. central bank's preferred measure of inflation. U.S. Treasury yields were steady in Asia after falling the previous session, with the two-year yield at 3.7418% and the benchmark 10-year yield last at 4.2573%. In commodities, oil prices were set for a weekly decline with the Iran-Israel ceasefire holding and easing concerns over Middle East supply risks. Brent crude futures were up 0.58% at $68.12 a barrel while U.S. crude rose 0.6% to $65.63 per barrel on Friday, but both were headed for a fall of more than 10% for the week. Spot gold fell 1% to $3,294.50 an ounce. - Reuters
The Star
2 days ago
- Business
- The Star
Shares rally but dollar weakens with Fed independence seen under threat
SINGAPORE: Asia shares hit their highest level in more than three years on Friday as they tracked a Wall Street rally, though the dollar struggled on concerns about the Federal Reserve's independence and expectations for early rate cuts. Stock indexes worldwide look set to end the week on a positive note, with worries about tensions in the Middle East and uncertainty over tariffs and trade deals on the backburner for now. MSCI's broadest index of Asia-Pacific shares outside Japan touched its strongest level since November 2021 early in the session. It last traded 0.2% higher and is set to clock a 3% gain for the week. Japan's Nikkei jumped 1.5% and surpassed the 40,000 mark for the first time in five months. Reasons for the upbeat mood included news that Washington has reached an agreement with Beijing on how to expedite rare earth shipments to the United States. U.S. Treasury Secretary Scott Bessent also said on Thursday that he has asked Republicans in Congress to scrap the Section 899 retaliatory tax proposal from their tax and spending bill after Washington reached an agreement with Group of Seven industrial countries. "That was something that had been making some investors, especially foreign investors, nervous when that provision was passed by the House. So if that provision gets removed, then that allays one of the concerns from foreign investors," said Khoon Goh, head of Asia research at ANZ. "The cumuluation of these various... positive developments all helped to contribute to the buoyant market mood we're seeing." European futures also gained, with EUROSTOXX 50 futures and DAX futures both up 0.6%, while FTSE futures advanced 0.16%. U.S. stock futures were little changed, though Wall Street had on Thursday closed near record highs, further supported by expectations of imminent Fed rate cuts. FED CUTS COMING Much of the focus for markets over the past two sessions has been on the prospect of an early change of guard at the Fed, after the Wall Street Journal reported that U.S. President Donald Trump has toyed with the idea of selecting and announcing Fed Chair Jerome Powell's replacement by September or October. That knocked an already battered dollar even lower as traders fretted about an erosion of Fed independence and as they moved to price in more U.S. rate cuts this year. The dollar languished near a 3-1/2-year low on Friday and was headed for a 1.4% weekly loss, its largest decline in over a month. For the year, the greenback is already down more than 10% and if it stays that way in the next few days, that will mark its biggest first half-of-a-year fall since the start of the era of free-floating currencies in the early 1970s. Against a weaker dollar, the euro was perched near its highest in over three years at $1.1688. Sterling rose 0.03% to $1.3730. "Trump's desire to 'shadow' the Fed using a designated replacement for Chair Jay Powell isn't a good way to promote the perceptions of integrity and autonomy in U.S. policymaking and, by extension, that of the reserve currency status of the U.S. dollar," said Thierry Wizman, global FX and rates strategist at Macquarie Group. Adding to the Fed cut bets has been a raft of weaker-than-expected U.S. economic data, with attention now shifting to Friday's release of the core PCE price index, the U.S. central bank's preferred measure of inflation. U.S. Treasury yields were steady in Asia after falling the previous session, with the two-year yield at 3.7418% and the benchmark 10-year yield last at 4.2554%. In commodities, oil prices were set for a weekly decline with the Iran-Israel ceasefire holding and easing concerns over Middle East supply risks. Brent crude futures were up 0.41% at $68.01 a barrel while U.S. crude rose 0.46% to $65.53 per barrel on Friday, but both were headed for a fall of more than 10% for the week. Spot gold fell 0.23% to $3,320.25 an ounce. - Reuters
Zawya
2 days ago
- Business
- Zawya
Shares rise on China-US trade hopes, dollar on the back foot
PARIS - Global shares rallied on Friday, helped by signs of progress in U.S.-China trade talks, while the dollar held close to its lowest levels in more than three years. World stock markets have rallied to record highs this week, as traders took confidence from a ceasefire between Iran and Israel and markets stepped up bets for U.S. rate cuts. A trade agreement between the U.S. and China on Thursday on how to expedite rare earth shipments to the U.S. was also seen by markets as a positive sign, amid efforts to end the tariff war between the world's two biggest economies. Asian shares hit their highest in more than three years in early trading, and U.S. stock futures pointed to a firm start for Wall Street shares. The pan-European STOXX 600 index was up 0.8% on the day, set for a 1.1% weekly gain - its best week since mid-May. London's FTSE 100 was up 0.5% and Germany's DAX gained 0.6%. The MSCI World Equity Index touched a fresh record high and was set for a weekly gain of 2.8%. The S&P 500 index is up just 4.4% this year overall, following a volatile first half of the year, dominated by U.S. President Donald Trump's "Liberation Day" tariff announcement on April 2, which sent stocks plunging. "What we are having right now is potentially some optimism about some trade deals," said Vasileios Gkionakis, senior economist and strategist at Aviva Investors. "We have... come from quite low levels in the aftermath of the Liberation Day in April. To a certain extent we have also had some mini-selloff on the back of the events in the Middle East, and in that sense we're rebounding." Trump has set July 9 as the deadline for the European Union and other countries to reach a deal to reduce tariffs. Mark Haefele, Chief Investment Officer at UBS Global Wealth Management said that in the near-term, the firm saw greater upside potential in U.S. and emerging markets than in Europe. DOLLAR DROP The dollar remained on the backfoot, hovering near its lowest level in 3-1/2 years against the euro and sterling. The dollar index was down a touch on the day at 97.269 , holding near its lowest in more than three years. The euro was at $1.1708, getting a lift after data showed French consumer prices rose more than expected in June. It held near multi-year peaks hit a day earlier. "We see the U.S. dollar as unattractive," said Haefele at UBS Wealth Management. Markets are focused on U.S. monetary policy, as traders weigh up the possibility of Trump announcing a new, more dovish chair of the Federal Reserve. Traders have stepped up their bets on U.S. rate cuts, and are now pricing in 64 basis points (bps) of easing this year versus 46 bps expected on Friday. The dollar is having its worst start to a year since the era of free-floating currencies began in the early 1970s. 'I don't think it's just the repricing of the Fed, I think there is a broader issue here of some tarnishing of U.S. exceptionalism,' Aviva Investors' Gkionakis said. Core PCE price data, the U.S. central bank's preferred measure of inflation, is due later in the session. German 30-year government bond yields were on track for their biggest weekly increase in nearly four months after rising this week on expectations of increased borrowing by Germany's government. Oil prices meanwhile rose but were set for their steepest weekly decline since March 2023, as the absence of significant supply disruption from the Iran-Israel conflict saw any risk premium evaporate. Brent crude futures rose 0.5% to $68.06 a barrel while U.S. West Texas Intermediate crude was up by the same amount to $65.54.
