Perpetual's Matt Sherwod on the key messages for investors from last week
Perpetual's Matt Sherwod on the key messages for investors from last week. Last week we saw how powerful the US Fed can be in moving markets. The sheer mention of rates being moved ahead of expectations saw markets incur sizable losses, until investors determined that the US economy would have had to improve for that to occur. There remains a lot of uncertainty around the 2014 global outlook at present, with Asian financial system stability and Chinese economic growth sustainability (at +7.5%) at the forefront of investor concerns. However, the US Fed by continuing its tapering process and preparing the path for higher rates, is determined not to add to that list for investors. Indeed if China's economic expansion moderates to a sub-7% pace in the next 12 months, investors will be hoping for improved US growth, even if it means that US interest rates have to move fractionally higher.