Fidelity’s Trevor Greetham sees positive global backdrop for equities, despite US government shutdown
Trevor Greetham, director of Asset Allocation at Fidelity Worldwide Investment, says the backdrop is still friendly to equities, despite the US government shutting down in the wake of its latest budget difficulties.
The US government has shut down for the first time in 17 years after House Republicans refused to agree spending plans that included president Obama’s affordable health care scheme, already signed into law. The impasse could drag on as negotiations are likely to factor in a rise in the US federal debt ceiling that will become necessary later in the month.
We do not expect the fiscal standoff in Washington to have a lasting impact and stock market weakness presents a buying opportunity.
The dispute has the power to depress economic activity temporarily and it will play havoc with the economic release calendar. But the US is four years into a steady, self-sustaining recovery and the Federal Reserve stands ready to offset any marginal fiscal tightening that may come out of the negotiations.
When the smoke clears we will see a global expansion that is strengthening and broadening with monetary policy set to stay loose in every major economy. An equity-friendly backdrop.