Dominic Rossi, Global CIO of Equities at Fidelity International, explains why he thinks US equities will continue to outperform in the wake of the UK’s decision to leave the EU.
“The rise in European risk premia following the UK’s decision to leave the EU, further strengthens our conviction that US equities will continue to outperform. The US economy is showing signs of a rebound in consumption and we feel that the weak earnings environment of the last two years is fading.
“We are concerned about the strength in the US dollar post Brexit, but if anything this will further postpone the next rate hike. We had expected two hikes this year, now we think there is likely to be one at the most.
“We see political risk, and the forthcoming presidential election, as the greatest threat to the US stock market. Once we are past this event we think the US market will focus on earnings growth in 2017.”
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