Deutsche Bank Slashes S&P 500 Target Amid Trade War Concerns

Citing increasing economic instability stemming from the ongoing U.S. trade disputes, Deutsche Bank has significantly reduced its year-end projection for the S&P 500 index by 12%.

In line with other international financial institutions, Deutsche Bank has lowered its target to 6,150 from 7,000. However, they anticipate a potential stock market rebound should trade tensions de-escalate.

Despite this adjustment, Deutsche Bank’s forecast remains higher than many of its rivals, with only a few brokerages maintaining targets above 6,000. In contrast, U.S. firms like Goldman Sachs and Citigroup predict the index will remain below 6,000 by year’s end.

Deutsche Bank strategists noted in a report released Wednesday that while there have been several attempts to ease the situation, a reliable easing of trade policy has not occurred, and macroeconomic concerns have been intensifying.

The unpredictable tariff policies of President Donald Trump, exemplified by a recent temporary suspension on a wide range of imports and specific exemptions for certain Chinese products, have rattled financial markets and heightened concerns about a trade war and potential global recession.

Deutsche Bank emphasized that while the final tariff rates are still uncertain, the possible effects of the currently announced rates indicate substantial impacts, with U.S. companies likely bearing a significant portion of the tax burden.

The firm also decreased its earnings per share estimate for the index from $282 to $240.

The S&P 500 has decreased by more than 8% this year, having entered correction territory in March. Deutsche Bank anticipates the index will fluctuate between 4,600 and 5,600 in the near future.

The index closed at 5,375.86 points on Wednesday.