Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory and asset management firms, affirmed that the S&P 500’s recent record highs signal resilience against potential uncertainties stemming from the upcoming US presidential election.
Green’s bullish outlook follows the S&P 500’s Monday close at 5,572.85, marking its 35th record high this year with a modest gain of 0.1%.
“Despite the remarkable performance, uncertainties surrounding the US presidential campaign—such as questions about Biden’s potential replacement and the possibility of Trump’s re-election—could trigger a market pullback,” Green commented.
He highlighted factors supporting a bullish stance amidst election uncertainties: “In the event of an economic slowdown, the Federal Reserve stands ready to cut interest rates, providing a critical safety net for the economy. This readiness significantly mitigates perceived downside risks for investors.”
The upcoming release of June’s US consumer price index (CPI) on Thursday could bolster hopes for Fed rate cuts if the data shows slight improvement, potentially providing a positive turn amidst the uncertainties. Additionally, producer price index data is expected on Friday.
Green emphasized the supportive actions of US central banks and robust corporate fundamentals as critical factors underpinning a favourable equity environment, instilling a sense of reassurance and confidence. “Strong corporate performance and solid fundamentals provide a sturdy foundation for continued growth,” he noted.
Looking ahead, Green highlighted the commencement of earnings season on Friday, with expectations at record levels, sparking excitement and hope. Major banks including BlackRock, Citigroup, JPMorgan, and Wells Fargo are set to report, followed by Goldman Sachs on Monday and Bank of America and Morgan Stanley on Tuesday.
“Despite election uncertainties—a factor markets typically dislike—current conditions present a strong case for a bullish outlook,” Green concluded. “The Fed’s preparedness to cut rates in response to economic slowdowns instils confidence. Combined with proactive monetary measures and robust corporate health, these factors create a favourable environment for equities.”
