Global financial markets are expected to remain volatile in the third quarter as investors navigate uncertainty surrounding US monetary policy and elevated valuations of risk assets, notes CIMB Thai Bank (CIMBT), which suggests global equities, particularly technology and artificial intelligence (AI)-related stocks.Amid near-term uncertainty, the bank also recommends greater portfolio diversification through alternative assets, said Jirapaiboon Rattanapanurak, head of wealth research and advisory.
CIMBT predicts the US Federal Reserve may raise interest rates one more time this year as inflation remains persistent. Any additional hike would likely be a short-term measure to contain inflation rather than the start of a new tightening cycle, he said.
Inflationary pressure is likely to gradually ease as global supply chains continue to normalise and geopolitical tensions moderate.
Global equity valuations, especially for tech companies and businesses linked to the AI supply chain, have become increasingly expensive amid strong earnings expectations, noted the bank.
"As a result, markets could experience volatile periods if corporate earnings or economic data disappoint investors," Mr Jirapaiboon said.
