What Does US Growth Mean for Investors? – Morningstar

The US economy has done the triple this week – GDP figures were better than expected, the Fed continued with plans to phase out quantitative easing and unemployment figures are expected to be positive. 

JP Morgan Asset Management’s Global Market Strategist Kerry Craig said that all these signs pointed to further record highs for the S&P 500. 

He did warn that investors in the US stock market would have to be more selective in the future however. Where in the past it was enough just to have exposure to the rising index, now investors will have to be more stock and sector specific to make gains. 

Mark Burgess, chief investment officer for Threadneedle said that manufacturing and employment in America were clearly on an improving trend.

“Unit labour costs are falling and have been for a while. The benefits to manufacturing of cheaper energy from shale gas are huge,” he said.

“Added to that, relatively high inflation in Asia from rising labour costs in that region is creating a shift in US manufacturing and its global competitiveness. As a result, new capacity is opening in the US and companies are repatriating some of their operations back to America.”

But it’s not just investors in the US who should be aware of goings on across the pond. The Fed tapering QE will have an impact not just those who held US assets – but European ones too, according to Stuart Thomson, chief market economist at Ignis Asset Management.

“Despite Mario Draghi’s commitment to ‘do whatever it takes to save the euro’, the catalyst for spread compression in Europe was not rhetoric by policymakers, but driven by the Federal Reserve’s previous policy of QE infinity,” he said.

“With the Fed now discussing tapering, we believe the initiation of this policy will result in further spread widening in Europe.”