Morgan Stanley: Funds may shift from tech stocks, and the upward structure of U.S. stocks could turn into a broader rotation

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Mars Finance News, June 15 — Morgan Stanley stated that the upward structure of the U.S. stock market may be changing, with funds likely to flow from overvalued technology sectors to a broader range of cyclical industries.
Led by Michael Wilson, the strategy team pointed out that as geopolitical risks ease, oil prices decline, and pressure from interest rates and the dollar diminishes, the market environment is gradually becoming favorable for economically sensitive assets, and sectors that have underperformed in the past may see a rebound opportunity.
The report believes that previous gains in U.S. stocks were mainly concentrated in technology stocks, but currently, cyclical industries (including non-essential consumer goods, transportation, and regional banks) remain underweighted overall, leaving room for capital to flow back.
Recent expectations of easing U.S.-Iran tensions and improved passage through the Strait of Hormuz have also boosted market risk appetite.
JPMorgan Asset Management European strategist Karen Ward also pointed out that falling oil prices could become an important support for the stock market and are expected to further encourage central banks worldwide to adopt easing policies.
She predicts that oil prices may temporarily fall back to around $70 per barrel.
Additionally, Deutsche Bank’s strategy team believes that the long-term relative advantage of U.S. stocks may weaken, and European markets, with a higher proportion of cyclical stocks, are relatively attractive.
Overall, institutions generally believe that if geopolitical risks continue to subside and inflation declines, the U.S. stock market may shift from a “technology-led structural rally” to a “more balanced cyclical rotation.”
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