US market likely to remain bullish amid volatility, says JPMorgan

CFO cites excess capital and strong fundamentals as reasons

- Ven Sreenivasan

The US equity market valuation looks frothy, but given the amount of liquidity in the system, the upside remains intact for now.

JPMorgan chief financial officer Jeremy Barnum sees money continuing to chase higher returns.

"There is excess capital in the system," he said. "What else are you going to do in the market when the US continues to enjoy an exceptionally strong economy? There is no sign of any soft landing yet." Indeed, major Wall Street indexes have hit multi-year highs in 2024 and remain there despite the US Federal Reserve's attempts to tamp down inflation with the highest Fed rates in 23 years, with the Fed funds rate now between 5.25 per cent and 5.5 per cent. With inflation still sticky on the downside, Fed boss Jerome Powell has played down the likelihood of multiple rate cuts in 2024.

Mr Barnum, who spoke to The Straits Times during a visit to Singapore last week, said: "Despite the restrictive Fed policy, we still have a fundamentally robust banking system and a strong corporate earnings environment.

"The underlying strong fundamentals are supporting the markets. Inflation is stuck at 3 per cent, and it remains to be seen what the Fed can do in the last mile. Meanwhile, there is a lot of capital stuck on the sidelines." Looking beyond the US market, Mr Barnum sees Japan as another bright spot.

"They have made the exit from the liquidity trap, and rates are no longer negative there. Inflation is back and there are no more unconventional central bank policies.