The US economy is the most important short-term global influencer – not Brexit, says JP Morgan Asset Management’s Stephanie Flanders.
Talking at the Morningstar Investment Conference, the chief market strategist for UK and Europe at the US asset manager says although the US is not heading towards a recession, there are some factors still undermining the economy that need to be closely examined.
Flanders says that the rate of US workers quitting their jobs remains very high and despite a healthy labour market it is “probably getting tighter”.
She says: “Global recession fears have receded but the economy is weaker since the start of the year so we don’t expect a recession but we expect weakness within the market.”
JP Morgan says it expects two further interest rate hikes by the Federal Reserve in the second half of the year.
“The market had always been predicting a slower pace of rate rises. When interest rates go up they normally go up by 2 percentage points per year,” she says.
Despite playing down Brexit risks compared to the US, in the short term Flanders says the Eu referendum does present problems for markets.
“Businesses in the UK are delaying their plans. If we did chose to leave the EU it is likely the UK will restructure its economy,” she says.