Fundamentals the key to US stocks

Investors need to focus on company fundamentals rather than the outcome of the US presidential election according to Russell Investments senior investment strategist, Wouter Sturkenboom.

While Sturkenboom acknowledged that the choice of Hilary Clinton or Donald Trump as the next US president is important, he said that US market would be driven more by US corporate earnings the likelihood of them continuing to increase in line with expectations. He added that fiscal policy will be a small tailwind for the economy, whatever the election result, with both candidates proposing new infrastructure spending. But he noted that passing a fiscal stimulus programme through the fiscally conservative House of Representatives could be difficult, meaning the Fed will continue to support the US economy. Sturkenboom concluded: “In the long-term, however, the Fed is concerned that it will be constrained by the zero lower bound for interest rates more frequently, meaning it is thinking about new and innovative ways to support growth over the longer-run. The ideas of a higher inflation target or nominal GDP targeting, once considered far-fetched in Fed circles, have featured more prominently in recent years.”