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1. Morgan Stanley upgrades U.S. equities to Overweight, citing a combination of resilient earnings, supportive monetary policy, and a weakening dollar.

The Wall Street giant now favors American stocks over other regions, projecting the S&P 500 to reach 6,500 by the second quarter of 2026. Earnings per share (EPS) is forecast to grow steadily through 2027, supported by a pressured dollar and a backdrop of falling interest rates, with valuations expected to remain elevated.

"We prefer U.S. to non-U.S. equities as we anticipate earnings revisions to trough in the near term and USD weakness to be a positive catalyst for multinational earnings," Morgan Stanley said in its mid-year global strategy outlook published Tuesday.

"U.S. risky and risk-free assets are attractive versus the Rest of World (RoW) against a backdrop of a slowing but still expanding global economy despite policy uncertainty, along with deregulation and more rate cuts than priced in the markets," the report notes.

Despite sluggish growth, Morgan Stanley maintains that "the global economy is not in a recession." It sees expansion continuing, albeit at a slower pace, supported by easing inflation, policy stimulus, and a reduction in extreme downside risks.

Meanwhile, they see the dollar continuing to weaken as the US’s economic growth premium relative to peers fades and the yield gap between it and other countries narrows.

2. US dollar sellers are making a comeback.

The US dollar recorded sharp losses following Moody's decision on Friday evening to downgrade the US credit rating to AAA. Overall, this devaluation came at a bad time for the US dollar, given the focus on US fiscal policy and the ongoing debate over growing confidence in the currency.

Market experts believe that the main problem for the United States is that bond and currency markets have not adequately considered financial risks in the first place.

Accordingly, the current attempts by the US Republican Congress to pass a tax bill will increase pressure on the budget deficit in the medium term. According to ING Bank, the US dollar is expected to remain firm this week, as investors await any signals regarding currencies in ongoing trade deals with Asia. A meeting of G7 finance ministers and global central bank governors is also scheduled for Tuesday in Canada. ING added, "It seems highly unlikely, but any changes in their statement's exchange rate reference – pushed by the US Treasury – would pose a significant risk to the dollar."

MUFG Bank commented, "Moody's downgrade of the US sovereign credit rating reminds us of the increasing risk of foreign investors' reluctance to buy US Treasuries." The bank added, "Triple sell-offs in US assets have been rare and spaced out in recent years. Our analysis of these selloffs (with 30-year yields rising by at least 15 basis points) points to further US dollar sell-offs in the future."

3. China is on track to become the world’s first major “electrostate”.

Its electrification rate is reaching 30 percent.

This puts China ahead of both the EU and the US, where the proportion of electricity in total energy use has remained steady at about 22 percent in recent years.

4. Not all chipmakers are created equal on the chip farm.

US firm Wolfspeed plummeted in extended trading following a Wall Street Journal report that the chipmaker is preparing to file for bankruptcy.

5. Tailwinds for the utility sector.

Utilities are Europe’s best performing sector over the past three months, buoyed by surprisingly resilient earnings and their attraction as havens in moments of market volatility. And now the cherry on the cake: The resumption of a major wind farm project in the US. The sector is up 16% since Feb. 20, thanks to good profit growth which has defied expectations for an overall drop.

With US President Donald Trump unexpectedly moderating his opposition to windpower this week, the sector’s outperformance could go on for a while, especially given bets on lower interest rates.

Analysts have been raising their earnings expectations for utilities, one of only three sectors alongside financials and real estate across in the Stoxx Europe 600 where estimates are higher than they were at the start of the year.

The positive picture for utilities extends to their role as domestically focused havens in these times of uncertainty around global trade tariffs, along with other defensive parts of the market like insurance and telecommunications. Their domestic focus has also insulated utilities from the earnings impact of a rising euro.

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