The American stock market is currently trading at historic highs. But, will this trend continue in the months to come?
If the American Stock Exchange has broken record after record since the end of the Coronavirus health crisis, it is not the result of chance. Indeed, growth in the United States still remains solid. As specified by Alexandre Hezez, group strategist at Banque Richelieu, GDP is clearly above forecasts for the fourth quarter of 2023, showing +3.3% over an annualized quarter (compared to 2% anticipated), mainly driven by household consumption.
And given the drop in inflation observed in recent months, it is not impossible that the American Federal Reserve (Fed), starting this summer, begins a new cycle of lowering interest rates, likely to further support activity, according to specialists.
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A well-valued market
The fact remains that valuations remain high in the face of very optimistic expectations of profit growth for the year even if the trend remains positive, adds Alexandre Hezez. An opinion also shared by David Cohen, co-manager of the Robeco BP US Large Cap Equities strategy, even if the latter points out that the performance of the American markets has become very dependent on the magnificent seven, namely GAFAM Alphabet (a company resulting from the restructuring of Google), Amazon, Meta (formerly Facebook), Apple and Microsoft, to which are added Nvidia, a leading company in the production of hardware and software related to artificial intelligence, and Tesla.
The Magnificent 7
Indeed, their weight in the main American stock market indices (around 30% in the S&P 500 index) largely explains the current dynamism of the stock market in the United States. Moreover, last year, the share prices of these companies experienced exceptional growth: Nvidia (+ 238.9%), Meta (+ 194.1%), Tesla (+ 101.7%), Amazon (+ 80.9%), Alphabet (+ 58.8%), Microsoft (+ 56.8%) and Apple (+ 48.2%), resulting in an increase of almost 25% in the S&P 500 in 2023 , specifies David Cohen.
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How to invest in the American Stock Exchange
In any case, investors wishing to position themselves on these markets can turn to a Sicav or an equity FCP specializing in this theme. But it is also possible to invest through an ETF that replicates almost identically the performance of an American stock market index, such as the S&P 500 for example. Easy to use and inexpensive in terms of management fees, these ETFs provide low-cost exposure to the dynamism of the American stock market. And the icing on the cake, some of them are also eligible for the Stock Savings Plan (PEA).
Take into account the currency effect
However, whether it is a Sicav, a FCP or even an ETF, all of these products are invested in securities denominated in dollars. Consequently, if you are considering such an investment, it is essential to be aware of the risk linked to the evolution of the greenback in the coming months because the invested capital is then exposed to a risk of depreciation of the dollar against the euro. In addition, we must also not forget that any investment in the stock market presents a risk of capital loss due to the volatility inherent in the stock markets.
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