Fed worries will not stop steady global expansion – RLAM

Added 13th September 2016

The sell-off over concerns that the Federal Reserve may raise rates on 21 September could develop into a good buying opportunity if economic growth persists, according to Trevor Greetham, head of multi asset at Royal London Asset Management.

Fed worries will not stop steady global expansion – RLAM

The rate rise expectations come despite recent weakness in US business confidence. But, said Greetham, stock markets are prone to shocks over the summer months and volatility tends to increase as we head into the autumn, so this correction is not wholly unexpected.

“We expect the steady if unspectacular expansion in the world economy to continue, irrespective of gradual increases in US interest rates,” said Greetham. He added that RLAM is looking to buy dips in the emerging markets, where stronger activity in China is a positive and in Japan where more stimulus is on the way.

“That said, the current sell-off may have further to run in the short term as our composite sentiment indicator is not yet giving a buy signal,” said Greetham.

Furthermore, RLAM outlined it expects a pick-up in stock market volatility; that Brexit has been a boost to multi asset returns; that the firm is sanguine on the near term impact of Brexit on the economy, and it is negative on gilts.

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