US equities have declined year-to-date driven by growth concerns. Fundamentals suggest the US market and most sectors are undervalued. However, valuations seem to broadly confirm our sector allocations. Our models suggest that if the US consumer remains robust and inflation low, then there is upside potential in the market.
October’s US unemployment report confirmed that the economy is getting stronger, making the probability of a first rate hike in December look more likely. In this context, Lazard Frères Gestion examines the consequences of a rate increase on the equity market from two separate angles.